Post by marcus on Jan 12, 2011 18:17:08 GMT -5
SPRINGFIELD, Ill. (AP) — Democratic Illinois lawmakers beat a looming deadline and approved a 66 percent income-tax increase in a desperate bid to end the state’s crippling budget crisis.
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 increase now goes to Democratic Gov. Pat Quinn, who supports the plan to temporarily raise the personal tax rate to 5 percent, a two-thirds increase from the current 3 percent rate. Corporate taxes also would climb as part of the effort to close a budget hole that could hit $15 billion this year.
“Governor Quinn today thanks the Illinois General Assembly for taking strong action to confront our fiscal crisis and provide the revenue and reforms needed to stabilize the budget, pay our bills and jumpstart Illinois’ economy,” a statement from his office said.
Quinn’s office said the higher taxes will generate about $6.8 billion a year – a major increase by any measure. In percentage terms, 66 percent might be the biggest increase any state has adopted while grappling with recent economic woes.
It will be coupled with strict 2 percent 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.
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 increase now goes to Democratic Gov. Pat Quinn, who supports the plan to temporarily raise the personal tax rate to 5 percent, a two-thirds increase from the current 3 percent rate. Corporate taxes also would climb as part of the effort to close a budget hole that could hit $15 billion this year.
“Governor Quinn today thanks the Illinois General Assembly for taking strong action to confront our fiscal crisis and provide the revenue and reforms needed to stabilize the budget, pay our bills and jumpstart Illinois’ economy,” a statement from his office said.
Quinn’s office said the higher taxes will generate about $6.8 billion a year – a major increase by any measure. In percentage terms, 66 percent might be the biggest increase any state has adopted while grappling with recent economic woes.
It will be coupled with strict 2 percent 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.