House Dems struggle to find consensus on tax hike as clock ticks

SPRINGFIELD — Illinois House Democrats still don’t have enough support to pass a Senate revenue bill that includes an income tax hike, or their own tax proposals — and a June 30 budget deadline appears to be a new goal line for a budget plan with just two days left in the regular session calendar.

While adjournment is scheduled for Wednesday at midnight, the new fiscal year begins on July 1. The state hasn’t had a full budget since July 1, 2015, amid a political war between Gov. Bruce Rauner and Illinois House Speaker Michael Madigan. And a partial budget expired on Jan. 1, leaving public universities and social service agencies struggling to survive.

“The first of July is the real deadline for having a budget in place so the state can continue to operate,” said State Rep. Greg Harris, D-Chicago, who is serving as Madigan’s chief budget negotiator.

It becomes more difficult to pass legislation on June 1 when a three-fifths majority is needed. The governor has criticized the Senate revenue plan, and there aren’t enough Democrats to override him if he vetoed it.

Despite the Senate revenue bill clearing a House committee on Monday night, there were no immediate plans to call the measure for a vote.

The revenue bill would increase the personal income tax to 4.95 percent from the current 3.75 percent to generate $4.453 billion annually. There’s also a bump in the corporate income tax to 7 percent from 5.25 percent, which is expected to generate $514 million annually.

The bill also eliminates three corporate tax loopholes worth a combined $125 million a year. A sales tax on services would generate $55 million. And cable, satellite and streaming services would be taxed through a franchise tax, not a sales tax.

Among the many points of disagreement in committee, and among lawmakers, is that the tax increase would be retroactive, meaning it would effectively equate to 5.8 percent for the rest of 2017.

“We remain in need of a consensus approach,” revenue and finance chairman State Rep. Mike Zalewski, D-Riverside, said, noting that the House Democrats have a number of differences, including regional, socio-economic and political ones.

“This is going to be one of the most complicated, if not the most complicated budget package we’ve had to do since I’ve been down here and among those in the state’s history,” Zalewski said. “So to think that it’s going to come easy or be a very simple roll call, I think, it’s just not accurate. You know we have to find the right recipe, and as of yet, we’re still working on the right recipe.”

Zalewski said the House discussed the Senate revenue bill in a committee “to keep the conversation going about what we can do to raise more revenue.”

Harris said House Democrats are still working on coming to an agreement regarding revenues and expenses, as well as trying to find a way to pay down $14 billion worth of unpaid bills. There’s also discussions about ensuring money goes to schools.

“What we’re doing is working through issues one by one as they come before us and there are a wide spectrum of opinions around the Capitol on what each of those steps would be and trying to find a way through and get a majority,” he said.

Through private roll calls, there hasn’t been enough support for a revenue bill that includes the income tax increase. House Democrats are discussing both the Senate revenue bill and their own tax proposal, which has not yet been introduced.

“The issue is we haven’t had 60 votes on all the differing variables with [Rep.] Harris’ group proposal, or the Senate bill,” Madigan spokesman Steve Brown said.

Meanwhile, the Illinois House saw a productive day of voting on Monday, clearing an automatic voter registration bill and a procurement reform measure that was part of the Senate’s “grand bargain” plan.

Under the voting measure, Illinois residents who are getting a new or renewed driver’s license or state ID will be automatically registered to vote unless they opt out. Rauner last year vetoed a similar measure, blaming voter fraud and federal laws. But changes were made to the bill to win the governor’s support, including requiring residents to affirm they’re eligible to vote and also giving them an option to opt-out when they’re registering or renewing licenses. The bill must go back to the Illinois Senate for concurrence before being sent to the governor’s desk.

After the procurement reform vote, Madigan issued a statement saying the passage was the result of negotiation between legislators and the Rauner administration. But he reiterated that the “biggest issue facing Illinois remains the state budget.”

Rauner has said he won’t approve a budget that includes a tax increase without a four-year property tax freeze. Throughout the year, Madigan has released statements pointing out reforms the House has passed while trying to drive home the point that the state needs a budget.

“As the governor continues to hold other aspects of his agenda as pre-conditions to his cooperation on a full balanced budget, I renew my request that the governor immediately focus on working with House Democrats to find common ground and pass a budget for our state,” Madigan said in the statement. “Today’s agreement is proof that House Democrats are willing to make compromises to move Illinois forward.”

The Rauner administration, in turn, said the measure was “far from what is needed.”

“Tiny, incremental steps to change our broken system are better than nothing, but what the House passed today is far from what is needed,” Rauner spokeswoman Eleni Demertzis said. “While Speaker Madigan’s Democrats continue to argue over how big of a tax hike to impose on the people of Illinois, the governor remains focused on enacting real and lasting property tax relief.”