State income tax hike is one of ‘working group’s’ recommendations

SHARE State income tax hike is one of ‘working group’s’ recommendations

Gov. Bruce Rauner visits with students at New Berlin High School Wednesday, May 11, 2016, in New Berlin, Ill. File Photo. (AP Photo/Seth Perlman)

A hike in the state income tax, an expansion of the sales tax and $2.5 billion in cuts are among the key budget recommendations that rank-and-file lawmakers have sent to top legislative leaders, sources told the Sun-Times.

A bipartisan working group dubbed the “Budgeteer” group proposed the package for $5.4 billion in new revenue and sent it to the leaders on Wednesday.

Gov. Bruce Rauner said he is generally “cheering” the group’s work, but a top Republican leader cautioned that they are not “anywhere close to a deal.”

Illinois Budget Director Tim Nuding has been part of the talks, and has given Rauner some of the revenue numbers.

The Republican governor on Thursday said he is eager to see the final recommendations.

“I don’t want to get in front of any specific idea yet or comment because it’s a little dangerous to take one proposal out of context,” Rauner said at an early childhood development center in Springfield.

“This is going to be a grand, fairly fulsome compromise and virtually, we’ll know we’re at a good place where everybody involved is not particularly happy with the outcome but they are happy with certain elements of the outcome. Because that’s the political process, that’s the definition of a grand bargain.”

The recommendations include raising the personal income tax from 3.75 percent to between 4.5 percent and 4.75 percent, sources said. The proposal also includes an expansion of the sales tax to some services and getting rid of certain corporate tax breaks.

The package provides for $2.5 billion in cuts, including $450 million in debt forgiveness to the state and $400 million in cuts to Medicaid. About $300 million of that Medicaid cut could be recouped through the federal government, sources said. Another $100 million could be recovered through procurement reform.

None of the recommendations are items from Rauner’s Turnaround Agenda — a largely anti-union, pro-business list of reforms that Illinois House Speaker Mike Madigan has been fighting since last year. So it’s unclear whether Rauner and the state’s GOP lawmakers will agree to it.

House Republican Leader Jim Durkin said he’s received the recommendations but will more carefully review them over the weekend with his staff. He cautioned that it’s too early to call it a “deal.”

“I’m hesitant to suggest this is a framework. It is something to work off of and to discuss. I look at this as some progress but it is still a long way to go,” Durkin said.

He said the proposal must include “common sense reforms.”

“I’m pleased that at least there’s some progress being made but I’m not going to say that we’re anywhere close to a deal,” Durkin said.

A separate bipartisan working group is focusing on reforms, and it has made progress on three main issues: workers compensation reform, a property tax freeze and procurement reform. That group has been focused solely on reforms but has not yet issued its recommendations, sources said.

Madigan earlier this week warned that the working groups shouldn’t get bogged down with Rauner’s personal agenda.

And not all Republican lawmakers are on board for an income tax hike.“I’m totally opposed to raising the Illinois income tax. Raising taxes would kill jobs, hurt families, and drive more people out of Illinois,” State Rep. David McSweeney, R-Barrington, said. “We need to reform pensions and Medicaid, not raise taxes.”

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