Corporate Rate Would Rise from 5.25% to 7.00%
The Illinois House approved a $5 billion tax hike (SB9) and a spending bill Sunday night July 2, 2017, amounting to a 32 percent increase of the personal income tax rate for Illinois residents. The action follows a long weekend of discussion by lawmakers about the nation’s longest-running without budget of any state.
Saturday July 1, 2017 marked the state’s third straight fiscal year without a budget plan — the longest non-budget of any state since the Great Depression. The non-budget amounts to a dysfunctional state with a $6.2 billion deficit and $14.7 billion in past-due bills.
The tax increase vote was 72-45, one more than needed. The House also approved a budget bill, 81-34, which will then go on to the Senate and governor. Some Republicans broke away from Gov. Bruce Rauner drive for the state finances. Rauner immediately issued a statement saying he would veto the tax increase. Chicago Democratic House Speaker Michael Madigan said the balanced budget offers a compromise that cuts billions of dollars, but also provides new revenue.
Rep. Greg Harris, the Democrats’ budget negotiator, said the approved measures reflect a reduction in spending and could prevent Illinois’ credit rating from being downgraded to “junk” status, as promised by major credit agencies analyzing the no budget state. The revenue bill will also fund bonds that would begin paying off a backlog of bills, Rep. Greg Harris said.
“When I took office, I promised the taxpayers of Illinois that I would fight every day to take this state in a new direction after decades of failed leadership from both parties. Today, Springfield has decided to give the people of Illinois the largest tax hike in history and continue out of balance budgets with no real reform.
Under Speaker Madigan’s direction, legislators chose to double down on higher taxes while protecting the special interests and refusing to reform the status quo. It’s a repeat of the failed policies that created this financial crisis and caused jobs and taxpayers to flee.
I will veto Mike Madigan’s permanent 32 percent tax hike. Illinois families don’t deserve to have more of the hard-earned money taken from them when the legislature has done little to restore confidence in government or grow jobs. Illinois families deserve more jobs, property tax relief and term limits. But tonight they got more of the same.
For two and a half years we have been working to find common ground on a balanced budget. As recently as two days ago we believed that was possible.
The legislature could have passed a no reform budget like this one two years ago. Instead, they allowed Mike Madigan to play his political games, passed phony budgets, racked up our debt and inflicted pain on the most vulnerable. All of this to force a permanent, 32 percent tax increase on Illinois families.
Moving forward, this vote shows that if the legislature is willing to pass the largest tax hike in state history with no reforms, then we must engage citizens and redouble our efforts to change the state.”
— Gov. Bruce Rauner
Republican Rep. David McSweeney of Barrington Hills urged his fellow lawmakers to deny the last minute Illinois revenue bill, saying the tax hike would hurt constituents and small businesses.
“They’re all going to get screwed again by (former Gov.) Pat Quinn’s budget. This is Pat Quinn’s budget all over again. Let’s do the right thing for once. Let’s stand up for the taxpayers.”
— Rep. David McSweeney (R) Barrington Hills
Rep. David Harris, an Arlington Heights Republican, support the tax increase, which he said would finance a proposed expenditure plan that could bring the budget impasse to an end.
“It’s time to stop playing chicken with the fifth largest state in the union. I was not elected as a state legislator to preside over the financial destruction of this great state.”
— Rep. David Harris (R) Arlington Heights
Under the approved revenue legislation Sunday, the personal income tax rate would go from 3.75 percent to 4.95 percent. The corporate rate would rise from 5.25 percent to 7 percent.
“Today, Democrats and Republicans stood together to take a crucial step toward reaching a compromise that ends the budget crisis by passing a fully funded state budget in a bipartisan way. While none could say this was an easy decision, it was the right decision; it’s clear that a budget package that cuts billions of dollars in state spending and also provides new revenue is the only path forward. I’m grateful legislators worked together to provide for our schools, protect medical care for the frail elderly, services for survivors of domestic abuse and others in great need.
There is more work to be done, and we will continue working with Republicans to ensure the issues still on the table are fully resolved.”
— House Speaker Michael Madigan (D) Chicago
The bill package also calls for new taxes on services, including a sales tax to laundry and dry-cleaning, storage, pest control, alarm systems, tattoos and piercings, and satellite TV and streaming services.
The approved bill did not contain the sunset clause after four years that the governor wanted. The bill also lacks reforms to grow the economy, create jobs and provide property tax relief.
Next, the bills go to the Senate for decision, then to Rauner’s desk. The House only needed 71 votes to override any veto from Rauner, but received 72. The Senate needs 36 to override Rauner’s veto.
A third bill — the Budget Implementation Act SB0042 — also awaits a decision.
— Bruce Rauner (@BruceRauner) July 3, 2017
— Illinois Policy (@illinoispolicy) July 1, 2017
Rep David Harris: This is a property tax LIMITATION, not a freeze. But it is a 4-yr bill. If this is what gets us a budget, I'll vote yes pic.twitter.com/Pdxla0mmyk
— IllinoisChannel (@IllinoisChannel) June 28, 2017
— Chicago Tribune (@chicagotribune) June 30, 2017
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Angry shouts erupted when House Speaker, Mike Madigan, adjourned members without calling the budget for a vote.