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Down to the wire

Sunday, May 31, 2009

* The truth is, nobody knows what will happen today after the Senate’s game-changing vote to pass a 2 point income tax hike and expand the sales tax base…

The 31-27 vote shifted Statehouse dynamics after Democrats spent much of the day struggling to find support for a tax increase. With lawmakers on the brink of blowing their deadline, the focus now turns to the House, where Speaker Michael Madigan of Chicago repeatedly has insisted he lacks the votes among his Democratic majority to approve a tax hike.The uncertainty for the major Senate tax plan also was illustrated by Democratic Senate President John Cullerton’s acknowledgment that Republican votes are needed to get the plan through the House. But House Republicans have said they won’t support a higher income tax.

Beyond that, House Democrats have been reluctant to vote for a temporary 50 percent income tax rate increase for two years. The Senate plan they are being asked to approve is a 67 percent increase that would be permanent. And it’s one that would tax individuals at the same rate as corporations.

Rep. Art Turner (D-Chicago) said the votes are not available to pass either tax increase bill. “That’s reality,” Turner said.

But

Cullerton said that passing the bill in the Senate may help House Democrats feel safer about changing their minds. However, he said that the bill would need Republican support to pass. “When one chamber starts and passes a bill, they see that we’re still walking around — we’ve got a different version of what the governor has — that there’s a way to do this. So I think it’s a good start.”

* This change was hugely important

In order to attract suburban Democrats and try to draw Republican votes, the plan was altered at the last minute to take out a large increase in business income taxes. That increase is to 5 percent from 4.8 percent but had initially been set to go to 7.2 percent.

It worked for area Democrats. “I was a ‘no’ vote on this until, as somebody who had been a small-business owner, the corporate income tax rate they wanted to raise to 7.2 was knocked down to 5 percent,” said state Sen. Linda Holmes, an Aurora Democrat.

* $750 million is nothing to sneeze at

[Republicans] said the Senate bill offers only meager property tax relief. The property tax credits amount to only about $750 million. “The property tax relief in here is a joke,” said Sen. Kirk Dillard, R-Hinsdale.

* Gov. Quinn initially told reporters that he would stick with the House’s tax hike plan…

Before Saturday night’s vote, Quinn continued pushing for a smaller income tax package — one that would raise the individual rate from 3 percent to 4.5 percent and that would sunset in two years — that advanced out of a House committee Saturday. Quinn identified that plan as his top revenue choice.

“I think the plan we have here in the House is probably the one we’ll have to go with,” the governor said. “The whole idea is to at least at this time get enough revenue to hold off dire catastrophe.”

He has since changed his mind

But following the Senate’s action, a Quinn aide said the vote is “a meaningful first step and the House should consider it promptly.”

* And there’s internal pressure among House Dems to call the Senate’s proposal…

Majority Leader Barbara Flynn Currie tried early in the day to advance a temporary income tax increase. That wasn’t gaining enough votes. So late Saturday night, Currie tried to at least approve the “insurance budget” to keep the lights on, so to speak. Without it, agencies would be funded at 32 percent of Quinn’s proposed budget.

But after word spread that senators approved an income tax increase across the rotunda, several House Democrats started to peal off support for a bare bones budget. Rep. Sara Feigenholtz, a Chicago Democrat and vocal advocate of human services, urged fellow lawmakers to hold off on a bare bones budget to “continue to fight for more solutions.”

* And the governor has a big stick he could use

Gov. Pat Quinn wouldn’t say whether he will veto a budget that doesn’t include enough money to operate for the full year. “I don’t really want to be thinking about vetoes. I’d rather think about everybody coming together in the next 24 hours and passing a budget,” said Quinn, a Chicago Democrat. “It’s hard to do, but it’s for the best interests of the people.”

* The pressure is also building on some “moderate” Downstate House Republicans. I told subscribers about this development yesterday afternoon…

Governor Quinn also dropped in, claiming progress getting votes from the other side with help from former Republican governors Edgar and Thompson.

“Governor Thompson said he was in favor of our proposal. He suggested that we make it a temporary income tax and scale it down a little bit, and we have done that,” Gov. Pat Quinn said.

* And even if a tax hike passes there are still some very tough votes ahead

Supporters of a tax increase say it would not take the place of budget cuts.

They estimate that after spending cuts that have already been approved and the arrival of federal stimulus money, Illinois government still faces a gap of about $7 billion between revenue and expenses. The Senate tax plan would generate about $5.2 billion and a House version approved in committee Saturday would generate about $4.5 billion, so neither one would close that budget gap.

* Making things even more difficult, the governor’s proposed pension skim can no longer be justified with “reform” efforts

The state’s pension systems will not be split into two levels of benefits, the plan’s sponsor said Saturday. “At this point I believe the case has not been made to advance,” said state Sen. Don Harmon, an Oak Park Democrat. Harmon sponsored Gov. Pat Quinn’s idea of putting all new state, university and public school hires in a new, reduced benefit system.

* But this might help balance the budget, even though the House Speaker said he wouldn’t call it for a vote

One possible fix would be gambling expansion that also cleared the Senate late Saturday. On a vote of 30-28, senators approved new casinos for Chicago, Park City, Rockford and Danville. It also allows slot machines at Arlington Park and other tracks and lets existing floating casinos to expand and move off the water.

Sponsor Terry Link, a Waukegan Democrat, has said the millions in gambling taxes could be used to balance the budget. That plan also now moves to the House.

* Related…

* Online horse betting bill heads to Quinn

* House Dems paint picture without tax hike

* KOTOWSKI: I look at those programs that are in there. Programs for kids with autism, programs for seniors, programs for veterans, programs for abused and neglected kids. And these are serious programs that provide, uh, provide a safety net for folks that are struggling and don’t have a voice.

* Live blogging the Senate’s tax hike debate

* Senate’s tax hike bill

- Posted by Rich Miller        


1 Comment
  1. - Quinn T. Sential - Sunday, May 31, 09 @ 12:43 pm:

    AHHHHHHHH CHOOOOOOOOO!

    This is a joke worth sneezing at because of how it will most likely b allocated. Dillard knows what he cn expect for is district.


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