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Senate votes for tax increase, but plan's future in doubt
By John Patterson | Daily Herald Staff

Senate President John Cullerton, D-Chicago


Associated Press

Senate Minority Leader Christine Radogno, R-Lemont,


Associated Press

"This is going to kill jobs," said state Sen. Dan Duffy, a Lake Barrington Republican


State Sen. Kirk Dillard, a Hinsdale Republican


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Published: 5/31/2009 12:01 AM | Updated: 5/31/2009 12:04 AM

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SPRINGFIELD - Bowling, dog grooming, Cubs, Sox and Bears tickets, even getting a date would cost more and the state would take a bigger bite of your paycheck under a budget balancing tax hike plan the Illinois Senate approved late Saturday.

Attempting to wipe away a two-year, $12 billion deficit, the Senate voted to raise the individual income tax to 5 percent from 3 percent and begin applying the sales tax to a litany of items and services currently not taxed. It was approved 31-27 with one member voting present.

A separate, temporary income tax increase to 4.5 percent with no sales tax expansion also cleared a House committee early Saturday.

Both tax plans face dubious futures as the Democrats in the Illinois House have so far rejected tax increases and Republicans have said they won't put any votes on the plans.

The Senate tax plan raises $5.6 billion annually while providing some tax relief by increasing the personal exemption to $3,000 from $2,000 and doubling tax credits for property owners and education expenses. Combined with billions in federal stimulus money, supporters hope to close the gap in spending, though more than $2 billion in cuts still will need to be made even if the increases are enacted.

One possible fix would be gambling expansion that also cleared the Senate late Saturday. On a vote of 30-28, senators approved new casinos for Chicago, Park City, Rockford and Danville. It also allows slot machines at Arlington Park and other tracks and lets existing floating casinos to expand and move off the water.

Sponsor Terry Link, a Waukegan Democrat, has said the millions in gambling taxes could be used to balance the budget. That plan also now moves to the House.

As for tax increases, suburban supporters said it was the painful but right thing to do to finally fix the state's lingering financial problems.

"To be quite frank, I want to go back home and make my father proud, and my mom proud - that I'm doing the right thing and I'm going to vote yes," said state Sen. Dan Kotowski, a Park Ridge Democrat.

State Sen. Michael Noland, an Elgin Democrat, said voters put Democrats in charge of the state.

"And they know what we do. They know how we meet the needs of the people. That's why they sent us down here," Noland said.

In order to attract suburban Democrats and try to draw Republican votes, the plan was altered at the last minute to take out a large increase in business income taxes. That increase is to 5 percent from 4.8 percent but had initially been set to go to 7.2 percent.

It worked for area Democrats.

"I was a 'no' vote on this until, as somebody who had been a small-business owner, the corporate income tax rate they wanted to raise to 7.2 was knocked down to 5 percent," said state Sen. Linda Holmes, an Aurora Democrat.

Republicans didn't bite.

"This is going to kill jobs," said state Sen. Dan Duffy, a Lake Barrington Republican.

State Sen. Kirk Dillard, a Hinsdale Republican, said it came up short for the suburbs.

"As a suburbanite who hears about property taxes all the time, the property tax relief in here is a joke," Dillard said. "It does nothing to control out-of-control school district and local government property taxes."

The tax plan is meant to bail out the state budget in its first year, after which half the new tax money would go to public education.

For instance, the guaranteed minimum amount spent on educating each student would increase $231 to $6,190 for the 2009-2010 school year. In order to cover that, the state takes $20.8 million that'd otherwise be shared with local governments and instead sends it to school districts.

By the 2013-2014 school year that minimum level would go to $8,410.

The increases would also prevent any cuts to colleges, universities, community colleges and student aid in the coming budget. Those cuts had been targeted at $1.5 billion.

This is the state's first move toward taxing services, something supporters said recognizes how Illinois' economy has changed over the decades.

The state's 6.25 percent sales tax would be applied to everything from admission to sporting and cultural events and amusement parks, to bowling, dog grooming and dating services.

Lawmakers face a midnight Sunday deadline for approving a budget or face an overtime session that makes approval politically tricky.

Democrats control state government but on June 1 approving a budget, or just about anything else, requires support of 60 percent of the House and Senate. In the House, that'd force Democrats to reach across the aisle for Republican help.

But Republicans say they've been left out of talks to this point and aren't quick to help the Democratic majority pass tax hikes.