A vote in the General Assembly this spring could cut $451 million in state aid for local school districts if lawmakers forego an extension of the 2011 income tax hike.
Lawmakers are once again debating the extension of the Illinois income tax hike passed into law more than three years ago to aid the state’s economic woes. Signed into law in January 2011, Governor Pat Quinn had defended the massive 67 percent increase, which was said to have been the largest increase any state had adopted. Quinn’s office had said the higher taxes would generate about $6.8 billion a year.
The new law raised the personal income tax rate from 3 percent to 5 percent for four years and also raised corporate income taxes. The bill was passed largely by a Democratic majority and lame-duck lawmakers willing to support the bill before leaving office. Republicans did not back the measure in the House or the Senate, claiming they were not included in negotiations and fundamentally voicing their objections against tax increases in light of Illinois’ egregious spending habits.
This time around, some Democrats are exploring the option of eliminating certain tax exemptions. The House Democratic Caucus is planning to work with local businesses to revamp Illinois’ tax code. Spending cuts will also be included.
Democrats say that without the tax hike continuum, the state will be forced to pass a failing budget. But Republicans, who disapproved of the tax from the outset, are none too eager to support the continuation of a tax hike, claiming that Democrats promised the tax hike would be temporary, balance Illinois’ budget and pull the state out of debt, none of which have been accomplished.
The tax hike is slated to expire in January of next year, leaving a substantial gap in the next budget in the absence of billions of dollars secured by the 2011 tax hike. The General Assembly will vote on a continuation of the tax hike before both parties adjourn for the summer. Although Democrats control both chambers, it is uncertain whether they will have enough votes for passage.
Education Hit Hard without Tax Hike Extension
School officials and teachers hope Republicans and Democrats can come to some agreement on extending the income tax hike. According to projections by Senate Democrats, Illinois schools will face brutal cuts in general state aid-over $400 million-if lawmakers fail to reach an agreement.
The State Board of Education computed that in 2014, Springfield received approximately $36 million in general state aid, money which Quinn claims will have to be cut in the absence of an income tax hike extension.
Still, some Illinois residents wonder whether continuing the tax hike is a viable solution, given Illinois’ current $7 billion in unpaid bills and sizeable pension liability. “Democrats have done nothing but mismanage the state’s money since they’ve controlled things down in Springfield,” says Rick Pryher, a retired teacher and Peoria resident. “When a state has as much debt and liability as Illinois has, the problem really isn’t a lack of money; it’s a lack of wisdom in how to use it. I don’t know that throwing more money at our debt with another tax hike is going to make it go away.”
“It’s just another example of how Democrats are not following through on what they’ve promised,” says Cheryl Duffy of Peoria. “The Governor said this tax hike was a temporary thing. Making it permanent goes against everything he and his party told us back when it was signed into law. I’m disgusted, but frankly not surprised. We need to stop spending. Period. That’s the real issue.”
Other Peoria residents, including Betty Gervis of East Peoria, feel continuing the tax hike is necessary to help state schools. “What are we going to do? Let education fall by the wayside? Our schools and our teachers are depending on this money. We need to continue this tax—”
“Republicans need to wake up and get with the program,” says Sarah Shaw, a mother of three from Peoria. “If they can come up with a better way to fund our schools and other state programs, I’m all for it. But they’ve been shy about offering any suggestions.”