Quinn-Says not dishonest with taxpayers for campaigning during the 2010 election on a 1 percentage point increase

Posted by Ray Long at 12:01 p.m.

Gov. Pat Quinn said today he will sign a major income tax increase as soon as it hits his desk and rejected criticism that he had misled taxpayers by saying during his campaign that he would only sign a smaller increase.

With no votes to spare and no Republican support in either the House or Senate, the Democratic-controlled General Assembly sent the measure to the Democratic governor early this morning after hours of bombastic debate. The action came in the waning moments of the lame-duck session just before a new General Assembly is sworn in.

The measure would raise the personal income tax-rate by 67 percent and the business income tax rate by 46 percent.

"We had an emergency, a fiscal emergency," Quinn said during a statehouse news conference this morning, just hours after the state Senate voted to send him the tax legislation.



Quinn said "no" when asked if he had been dishonest with taxpayers for campaigning during the 2010 election on a 1 percentage point increase in the income tax rate but now agreeing to sign the 2 percentage point hike.

The governor sought to justify the larger increase in part by saying fiscal experts had told leaders the state's financial problems were escalating in the last two months.

"Our house was burning," Quinn said. "Our fiscal house was burning."

Quinn negotiated the tax plan with fellow Democrats who control the legislature and had to wade into the details just before midnight Tuesday to get the measure over a final hurdle when African-American senators balked at revisions to the deal.

The House passed the bill hours earlier Tuesday night -- likewise without a vote to spare and with nary a Republican in support.

The plan nearly faltered in the Senate when black lawmakers balked at the House’s decision to remove a property-tax relief component from the plan and failure to approve a cigarette tax hike for schools. But Quinn met privately with members of the Senate black caucus, who said he pledged to pump $250 million from the income tax increase into schools for each of the next four years.

"A lot of them are my friends and we worked together in campaigns and we believe in working together in important things that help children," Quinn said when reporters caught up to him after the Senate vote.

Asked if there was a lot of horse trading to win support, Quinn said "not really. Everybody voted their conscience."

Quinn deferred most questions until a news conference scheduled for 10:30 a.m., just hours before lawmakers elected in November were to be sworn in as the General Assembly starts a new session. Democrats relied on the votes of some lame-duck lawmakers to push through the tax increase.

"We were happy that the Senate voted that way and the House did too, and we'll talk about it tomorrow," Quinn said, forgetting that he meant a little later today.

Democrats argued the tax increase was needed to rehabilitate the state’s deadbeat image, but Republicans predicted it would drive businesses out of state.

“We have just come through the worst economic crisis in our lifetime…and we have not paid our bills,” Senate President John Cullerton, D-Chicago, told lawmakers shortly before the vote. “We are going to have to cut…even with this tax. We’re going to have to spend less money then we have in the last two years. And it’s going to be tough. But we are going to have our bills paid.”

Republicans, powerless to stop the Democratic agreement, were left to blame the majority party for lacking the guts to make tough budget choices.

“So here we are in the very end of this lame duck session on a late night putting more burden on the hardworking people of this state,” said Sen. Kyle McCarter, R-Lebanon. “Here’s an investment tip, put a lot of money into moving vans.”

“You may think you're stabilizing this budget but you’re not,” said Sen. Matt Murphy, R-Palatine. “You’re bankrupting our state with this bill.”

The Senate debate was interrupted shortly before 1 a.m. when a state lawmaker collapsed on the floor of the chamber. State Rep. David Miller, D-Lynwood, was watching the debate near state Sen. James Meeks, D-Chicago, when he collapsed as Republican leader Christine Radogno was making what was expected to be one of the final speeches of the night.

Medical personnel and concerned lawmakers clustered around Miller and then took him out on a stretcher. He appeared to be conscious when he was wheeled out to a waiting ambulance, and the debate resumed. Earlier in the night Miller had voted in favor of the tax plan--because of his unsuccessful bid for state comptroller, Tuesday was his last day in the Legislature.

"I’m a little bit off my game here," said Sen. Christine Radogno, R-Lemont, the Republican leader. "We certainly all hope Rep. Miller is ok."

Radogno went on to say she was glad Democrats were "owning" the blame for the state's dismal budget situation, but she said the spending restrictions in the bill were not good enough.

Earlier in the night the House, expected to be the more difficult place to gain traction, approved the tax measure 60-57.

Democratic House Speaker Michael Madigan chided Republicans for their refusal to support the proposal, after he and Democratic leaders who control the Senate spent days negotiating the size and scope of the tax plans behind closed doors with Quinn.

“They're on the sidelines,” Madigan said of Republicans. “They don't want to get on the field of play.”

The Senate, which approved a similar-size tax hike in May 2009 with more of the proceeds going to education, was temporarily hung up over the concerns of the black caucus. But after a meeting with Quinn, Sen. Kimberly Lightford, D-Maywood, said education funding had been “worked on” with Quinn.

Sen. Emil Jones III, D-Chicago, said black senators received a promise from Quinn that he would designate $250 million more to education over each of the next four years. The money would be generated by the increased income tax and had originally been designated for property tax relief. The final bill eliminated the property tax relief, freeing up those funds, Jones said.

Senators also gave final approval to a House passed plan that would allow the state to borrow nearly $4 billion to make its annual payment for public employee pensions. The House approved the plan last year.

The tax votes were the latest demonstration of a Legislature that has turned increasingly liberal since the November election, coming in the wake of a death penalty ban approved Tuesday and civil unions for gay and straight couples approved last month.

Quinn and Democratic legislative leaders raced to move the tax plan, which would raise the personal tax rate from 3 percent to 5 percent, before a new Legislature with fewer Democrats is seated. At least seven lame-duck Democrats, who will be out of office Wednesday, voted for it.

“Illinois is in crisis, absolute financial crisis, and there is no way we can dig ourselves out of the crisis without increased revenues,” said House Majority Leader Barbara Flynn Currie, D-Chicago. “There is no way, no way, we can cut our way out of the deficit we face.”

But Republicans argued that Democrats who have controlled state government since 2003 should make stringent budget cuts before seeking a massive income tax hike during a struggling economy.

“I can’t figure out how this plan does anything for our real problems. Our real problem is spending, the increased spending, the mentality that we have,” said Rep. Roger Eddy, R-Hutsonville. “We’ll continue to throw money into a hole that has no bottom.”

House Democrats twice failed to get the required support from Republicans to approve a massive $8.75 billion borrowing plan aimed at using a portion of new income tax revenue to pay billions of dollars in overdue bills. The measure needed 71 votes because it added to the state’s debt, but it got only 65 votes on a first ballot and 68 on a second.

Sponsoring Rep. Frank Mautino, D-Spring Valley, said failure to pass the borrowing plan would mean it would take up to eight years to pay off providers of state services who have waited months for their money.

Prospects for the tax hike had been questionable throughout the Legislature’s final day as Quinn held a number of one-on-one meetings with rank-and-file lawmakers, seeking votes needed to pass the tax package. Quinn entered the House chamber shortly after the vote to thank representatives who voted for the plan.

House passage of the income tax hike came after representatives voted 66-51 against a plan to boost the state’s 98-cent-per-pack cigarette tax by $1.01. The cigarette tax hike would have been earmarked to provide more than $300 million in new spending for schools, a provision sought by African-American lawmakers in exchange for their backing of a higher income tax.

In trying to sell the tax package, supporters sought to portray a sense of urgency, saying the failure to act to fill a $15 billion budget deficit, including a looming $8 billion in overdue bills, would lead to the state teetering into insolvency, its bond rating reduced to junk status.

“Everybody wants to go to heaven, but nobody wants to die,” said Miller, D-Lynwood, just hours before his collapse.

Under the bill that went to Quinn, the current 3 percent personal income tax rate would go to 5 percent until 2015, when it would drop to 3.75 percent. To gain more support among lawmakers, the plan would further lower the tax rate in 2025 to 3.25 percent.

For businesses, the current 4.8 percent corporate rate would go to 7 percent until 2015, when it would drop to 5.25 percent.

The plan calls for the corporate rate to fall in 2025 to the current 4.8 percent.

The tax increases, which would take effect retroactively to Jan. 1, would raise an estimated $6.5 billion over a full-year period.

In addition, the measure would attempt to limit spending in each of the next four budget years — $36.8 billion in the 2012 budget year, $37.5 billion in 2013, $38.3 billion in 2014 and $39 billion in 2015. The state’s auditor general would determine if lawmakers and the governor exceed those spending limits. If the limits are exceeded, the higher income tax rates would revert to current levels.

“This is not a game, not a trick. It’s a real spending cap,” Cullerton said. “We’re really trying to handcuff ourselves and the governor in our spending.”

But Republicans contended the limits would still allow growth in spending at a rate of 2 percent a year over the next four years, rather than require specific cuts to programs in the state budget.

Rep. David Reis, R-Willow Hill, said voters across the country spoke in November, voting for lower taxes and less government. Reis held up a map of Illinois that he said represents how many counties Quinn won in November to show that most of Illinois is against a tax hike, except the three counties Quinn won. "Three-county Quinn," Reis called the governor.

Quinn, who campaigned on a smaller income-tax increase, won Cook County, the state's most populous region, and that propelled him to 47 percent of the vote and victory over Republican Sen. Bill Brady of Bloomington. State Board of Elections totals show Quinn winning four counties: Cook, Alexander, Jackson and St. Clair.

Posted at 12:03:10 PM in Governor, Legislature

http://newsblogs.chicagotribune.com/clout_st/2011/01/quinn-on-tax-hike-our-fiscal-house-was-burning.html