SPRINGFIELD, Ill. — Faced with an expected $3 billion budget hole from an expiring income tax increase, Illinois lawmakers are grappling with whether to raise taxes to avoid major cuts to schools and social services next year.
With six weeks left in the spring session, Democrats must weigh the political risks of extending a tax hike in a year Republicans are making streamlined government spending a focal point in their campaigns for governor and legislative seats.
Lawmakers could make the 2011 temporary income tax increase permanent or change the state’s tax code from a “flat” tax, where everyone pays the same rate, to a progressive system, which taxes higher earners more.
House Speaker Michael Madigan last week abandoned a third proposal that he’d floated, to boost education funding by tacking a 3 percent surcharge on all earned income over $1 million. Madigan couldn’t get enough votes to push his plan through the House, despite a Democratic supermajority of 71 members.
Beyond the partisan divide, the Democratic caucuses in the House and Senate face internal battles.
“Outsiders think that as a Democratic majority we’re monolithic,” said state Rep. Jack Franks of Marengo, who was one Democratic vote against the millionaires tax, and is opposed to the other two tax proposals as well.
All 118 state representatives and 19 of 59 state senators are seeking re-election.
During his budget address last month, Gov. Pat Quinn warned of “extreme and radical” cuts if the state’s current personal income tax rate of 5 percent drops to 3.75 percent as scheduled on Jan. 1.
For weeks, agency heads have appeared before appropriations committees and spelled out doomsday scenarios if the tax expires, including the forced layoffs of 13,000 teachers across the state, higher university tuition and the closure of 10 historic sites.
Madigan has said he wants to “resolve” the issue of extending the tax increase before the end of the spring session May 31, a plan Senate Democrats say they support, if the proposal first starts in the House.