Quinn's budget may make income tax increase permanent

Gov. Pat Quinn is expected to emphasize his election-year theme of protecting the middle class as he presents a budget address Wednesday that political experts and lawmakers say could be his toughest yet.

The Chicago Democrat, facing re-election in what’s likely to be one of the fiercest campaigns nationwide, is expected to explain what Illinois will do to make up a roughly $1.6 billion revenue dip when the temporary income tax increase rolls back next year. But none of his options — from extending the increase, a done deal, according to the Chicago Tribune, to letting it sunset or approving a new tax on millionaires — will be politically easy or solve all the state’s serious financial problems.

Illinois still has a backlog of billions in unpaid bills, the potential for state agency cuts, the nation’s lowest credit rating and uncertainty with its pension debt.

Quinn has said that he’ll outline specifics for five years ahead, a nod to his re-election bid. The November contest against Republican businessman Bruce Rauner, who’s made criticizing Quinn’s leadership a cornerstone of his campaign, will determine if Quinn gets a second full term.

“The governor’s budget address is going to lay out a five-year plan for short- and long-term fiscal stability for the state,” Quinn spokesman Dave Blanchette said. “It’s going to emphasize paying down bills, protecting the middle class and properly funding education.”

Republicans and business groups have already vowed to fight any extension of the temporary income tax hike and claim state agency testimony predicting dire cuts has been overblown to justify an increase. They’ve called for cutting spending and limiting new programs.

“I want to hear a long-term solution for the state’s problems that’s based on cutting spending,” said Republican Rep. David McSweeney of Barrington Hills. “We need to cut spending and not raise taxes.”

Quinn has options in presenting his budget. He could call for an extension of the tax increase — even a partial one — or allow it to be rolled back as scheduled in January. He also could leave it up to the Legislature or back other ways to generate revenue, including House Speaker Michael Madigan’s recent push to tax Illinois residents who make more than $1 million.

However, it will be difficult to garner public support for any of those ideas.

A poll this week by the Paul Simon Public Policy Institute at Southern Illinois University showed more than half of Illinois voters prefer cutting existing spending over approving new revenue, though about 28 percent said it should be a combination of the two. The survey interviewed 1,001 registered voters by phone from Feb. 12-25. The margin of error was plus or minus 3.5 percentage points.

“This budget is the most challenging that Gov. Quinn has faced, but provides him the greatest opportunity to show leadership of where he wants to take the state in the next five years,” said Laurence Msall, president of the Chicago-based Civic Federation. The group supports extending the income tax increase for at least a year and then slowly scaling back overtime to help pay down bills and create an emergency fund.

Quinn could also revive his push for overhauling Illinois’ tax structure for one based on ability to pay. Democratic state Sen. Don Harmon of Oak Park made another push for the graduated income tax Tuesday. Unions have said they support the concept, but Republicans want it off the table during budget negotiations.

Already the budget has been viewed through an election-year lens. Initially planned for last month, Quinn asked lawmakers to move it until after the primary election so he could have more time to prepare a five-year blueprint for spending. Republicans accused him of playing politics so he could see who would be his primary challenger.

Quinn is likely to recap his signing of a landmark pension overhaul, which he’s called one of his biggest accomplishments. But the proposed budget won’t contain the estimated savings. The overhaul that cuts benefits for state employees and retirees is undergoing a legal challenge by unions who contend it’s unconstitutional.

He’s also expected to discuss his push to increase the state’s minimum wage from $8.25 to at least $10 by the end of the year. Quinn has made it a campaign theme, criticizing Rauner for initially calling to cut it.

Rauner, meanwhile, released an Internet ad Tuesday accusing Quinn of breaking his promises. It noted that the state still has a multibillion-dollar backlog of bills, despite pledges by Quinn and other Democrats to use the 67 percent tax hike to pay down that debt.

Lawmakers must approve a budget for the new fiscal year, which starts July 1, by the end of May.

SOPHIA TAREEN, Associated Press

Associated Press writer Kerry Lester contributed to this report.