How Quinn, Hynes propose to balance budget

January 17, 2010 9:20:56 PM PST
The state of Illinois is facing a huge budget deficit. Doing something about it could mean higher income taxes for many people.

Approximately 65 percent of Illinois voters surveyed by the Paul Simon Institute at Southern Illinois University said they opposed an income tax increase to reduce the state's budget deficit.

Nonetheless, the two Democratic candidates for governor are promising to lead an effort to raise taxes. However, they differ on how to do it.

During his State of the State address last week Gov. Pat Quinn repeated his belief that an increase in the Illinois 3 percent flat income tax rate is critical to reduce the $13 billion budget deficit.

"We understand that self-government means that we have to come together and find a way to finance our government," said Quinn.

The governor wants the House and Senate to increase the tax rates on individuals and businesses effective in July.

The Quinn plan includes an increase from 3 to 4.5 percent, with increased exemptions to shield families making less than $60,000 a year, or an increase from 3 to 5 percent with a reduction in property tax rates for homeowners.

"At a time of recession, at a time when people are struggling, we should not be raising taxes on the middle class, and that's what Governor Quinn wants to do," candidate Dan Hynes said.

Hynes, Quinn's primary opponent, wants to change the Illinois flat income tax to a federal-style progressive rate. The comptroller says, under his plan, only the state's wealthiest taxpayers would see their bills increase.

"Those making less than $200,000, which is 97 percent of the population, will not see an increase in their income tax," said Hynes.

But changing from a flat to progressive tax would require voters to approve a constitutional amendment in the fall election, meaning the additional revenue would not be available until 2011.

Governor Quinn says the state needs a tax increase now.

"We can do this, this year, not next year, this year," Quinn said.

Hynes would generate some revenue immediately by closing corporate loopholes, increasing the cigarette tax and charging the sales tax on some services.

"We didn't get into this mess overnight, and we're not going to able to fix it overnight," said Lawrence Msall, president of the Chicago Civic Federation.

Msall is skeptical that either the Quinn or Hynes tax plan would solve the problem. He says Illinois lawmakers must reduce the pensions of new employees and pass a law to limit spending.

"We have to structurally change the way Illinois approaches spending. We have been spending more than the state has been taking in, and that's made the situation worse," said Msall.

All seven Republican primary candidates for governor oppose an income tax increase. Their critics say there is no way to use spending cuts alone to balance a $13 billion deficit.

More coverage on what the Republican candidates say on the tax issue Monday night at during the ABC7 News broadcast on television at 10 p.m.