* Give him credit for taking a very risky stand…
Gov. Pat Quinn has prepared an election-year spending proposal that would make permanent the 67 percent income tax increase set to expire in 2015 and couple it with property tax relief for homeowners, sources familiar with the plan said Tuesday.
Quinn planned to tell lawmakers in his Wednesday budget address that the temporary tax increase he signed into law in 2011 is needed to fund education, said one of the sources who was briefed on his plan but not authorized to reveal the details in advance of the noon speech.
The property tax relief would take the form of a $500 refund, sources said. One source said it would be an annual refund as part of a restructuring of the current property tax break for income tax filers.
Quinn was also expected to tell lawmakers that the alternative is to drop the 5 percent income tax rate to 3.75 as scheduled on Jan. 1, but that would make state programs unsustainable, sources said.
*** UPDATE *** The Sun-Times now has more details…
Quinn’s plan would reconfigure how Illinois homeowners deduct their property taxes by setting up a system in which they would get an automatic $500 tax credit. That change will roughly double the state’s outlay on property tax relief from approximately $650 million to $1.25 billion.
Now, they can deduct 5 percent of their property taxes, which one source called “regressive” because homeowners with more expensive properties get to deduct more than those living in more modest homes.
Since they wouldn’t qualify for the property-tax rebate, low-income renters would draw some benefit from the doubling of the state’s earned income tax credit during the next four years, as Quinn will propose, sources said.
* Quinn to tout fiscal successes in budget address: On Tuesday, aides distributed a checklist of upbeat fiscal news Quinn is expected to highlight to a joint session of the House and Senate at noon. Included are reductions in the state’s backlog of bills and cuts in the state’s operating budget because of changes to the Medicaid program, the closure of prisons and savings in state office leases.
* Quinn’s budget may make income tax increase permanent