Another temporary tax hike? Costello says permanent increase lacks votes

News-DemocratMay 7, 2014 

Illinois State Rep. Jerry Costello II in a 2013 file photo.

DERIK HOLTMANN — dholtmann@bnd.com

— There might not be enough votes in the House to make Illinois' temporary tax hike permanent, so a one-year extension of the increase might be sought instead, according to a local lawmaker.

"They're having problems -- leadership in the Democratic Party -- coming up with enough votes to pass a permanent extension of the tax," said Rep. Jerry Costello II, D-Smithton.

Gov. Pat Quinn, Senate President John Cullerton and House Speaker Michael Madigan, all Democrats, are seeking to make permanent the temporary tax increase. The temporary, 67 percent increase in the state income tax was passed in 2011 and was billed as a way to fix the state's financial problems.

Cullerton has said he has enough votes in the Senate to make the increase permanent, but prospects in the House aren't as clear.

"I think for some of the people on the fence, if they could say it was a finite situation, it would be easier for them. For me, it doesn't change my position -- I'm a 'no,'" Costello said.

Steve Brown, a spokesman for Madigan, said he's not aware of any plan to back away from the permanent increase, in favor of another temporary one.

"That's news to me," Brown said. "I know the speaker is supporting what the governor has proposed. The speaker has told the press in recent days that he's continuing to work on that roll call."

Quinn, in his annual budget speech in March, said making the tax hike permanent would would move Illinois "beyond the era of annual budget emergencies." Quinn has said that if the revenue from the tax increase is lost, there would be severe cuts, including about 13,000 teachers laid off, 41,000 fewer children in child care, 21,000 elderly people losing their in-home care and 11,000 victims of domestic abuse not receiving shelter or assistance.

A spokesman for Quinn had no immediate comment Wednesday.

Some supporters of a permanent increase say another temporary increase would only put the state back in the same financial predicament later.

But another temporary increase could have a political benefit for Democrats: If Republican Bruce Rauner wins the governor's race over Quinn, it would leave Rauner in the position of having to increase revenue or make painful cuts to state government.

The temporary tax costs workers a week of pay. It was approved in 2011 as a temporary fix to generate $31 billion for paying off backlogged bills. But most of the revenue went toward employee pension funds and interest payments. Even with the cash infusion, the state still has a $3 billion budget gap.

The temporary tax is scheduled to end in January. If it does, the state's income tax rate will drop from 5 percent to 3.75 percent. As a result, the state's revenue would drop by about $1.6 billion.

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