SPRINGFIELD, Ill. (AP) — Illinois Gov. Pat Quinn defended a massive increase in state income taxes passed by lawmakers Wednesday and promised to quickly sign the measure to help heal the state's ailing finances.
Lawmakers worked overnight to pass the increase to raise the personal income tax rate from 3% to 5% for four years — a 66% increase. Corporate income taxes also will rise, but Quinn rejected the notion that it would decimate businesses.
The rate increase might be the biggest any state has adopted in percentage terms while grappling with recent economic woes. Nevertheless, Illinois' tax rate would remain lower than in several other states in the region.
"It's important for their state government not to be a fiscal basket case," Quinn told reporters outside his Capitol office.
Legislative leaders rushed early Wednesday to pass the politically risky plan before a new General Assembly was sworn in at noon, taking a slice out of the Democratic majority and removing lame-duck lawmakers willing to support the tax before leaving office.
The tax increase would temporarily raise the personal tax rate to 5%, a two-thirds increase from the current 3% rate. Corporate taxes also would climb as part of the effort to close a budget hole that could hit $15 billion this year. Quinn's office said the higher taxes will generate about $6.8 billion a year — a major increase by any measure.
The tax increase will be coupled with strict 2% limits on spending growth. If officials spend above those limits, the tax increase will automatically be canceled. The plan's supporters warned that rising pension and health care costs probably will eat up all the spending allowed by the caps, forcing cuts in other areas of government.
Other pieces of the budget plan failed.
Lawmakers rejected a $1-a-pack increase in cigarette taxes, which would have provided money for schools. They also blocked a plan to borrow $8.7 billion to pay off overdue bills, which means long-suffering businesses and social-service agencies won't get their money anytime soon.
House Speaker Michael Madigan said Republicans should have supported some parts of the plan instead of voting against everything. The proposal passed the House on Tuesday night 60-57, the bare minimum. No Republicans backed the measure there or in the Senate, where the measure passed 30-29.
"They're on the sidelines. They don't want to get on the field of play," the Chicago Democrat said. "I'm happy that the day has ended."
But Republicans noted they were not included in negotiations. They also fundamentally reject the idea of raising taxes after years of spending growth.
"We're saying to the people of Illinois, 'For eight years we've overspent, now we're going to make it your problem,'" said Rep. Roger Eddy. "We're making up for our mistakes on your back."
