Watchdog group supports tax hike

February 22, 2010 4:47:19 PM PST
A powerful civic group in Chicago is calling for an increase in the state income tax and some budget cuts from Springfield.

The Civic Federation says there is no other way to fix the state's finances than to raise taxes. The business organization blames the state's fiscal mess on years, if not decades, of mismanagement by Springfield politicians.

Lawrence Msall says his Civic Federation has done the math and there's no way that Illinois Gov. Pat Quinn and state lawmakers can resolve Springfield's $12.8 billion budget deficit without an individual and corporate income tax increase.

"Illinois, unfortunately, spends more than it takes in, it ignores its bills, and it ignores the cause of one of the biggest pressures on its budget and that's its pensions," said Msall.

The Civic Federation, whose membership includes the CEOs of many of Chicago's largest companies, recommends a tax increase from 3 to 5 percent for individuals and from 4.8 to 6.2 percent for corporations.

The watchdog group also recommends the state make $2.5 billion in additional spending cuts, a new state tax on retirement incomes and pension reform under which newly hired state employees receive fewer benefits payable at an older age.

Illinois Senate President John Cullerton says he believes pension reform is do-able during this legislative session.

"I think this has come to a head and we've got to do it right away," said Cullerton.

House Speaker Michael Madigan, who is trying to hold on to his party's majority in the fall election, now questions the need for a tax increase. And Republican leaders, including Senate minority leader Christine Radogno, are not impressed by the Civic Federation report.

"I most certainly don't subscribe to the notion that the first line of defense is to raise taxes. I think that's entirely counter-productive," said Radogno.

For the past year, Gov. Pat Quinn has advocated for an income tax increase. His likely Republican opponent in the fall, Senator Bill Brady said,"the state cannot afford to raise taxes. Every time you do it, you lose businesses and jobs. We need to lower taxes."

Msall said there's no way for state officials to cut their way out of the budget deficit.

"In order to cut that level, 12.8 billion, you're gonna have to fundamentally change the way we fund schools, the way we fund local government," said Msall.

Gov. Quinn has delayed his budget address until March 10th. Beginning Wednesday, February 24, his office will open a Web site where taxpayers may, "learn about the obstacles faced by state government." The Web site will also offer citizens a chance to comment on the budget mess and whether they believe a tax increase is necessary.