Civic Federation pans Quinn 2015 budget, property-tax rebates

SPRINGFIELD-A financial watchdog group Tuesday panned Gov. Pat Quinn’s proposed budget because it diverts funds from the politically uncertain extension of 2011 income-tax increases to new spending rather than whittling down a multibillion-dollar pile of unpaid bills.

With state lawmakers poised to begin acting this week on a state budget, the Civic Federation issued a new report that questions using revenues from a possible tax extension to pay for a $715 million property-tax rebate program for homeowners, rather than using those proceeds to stabilize Illinois’ precarious financial position.

“Instead of using the new revenue from the extension of the temporary income tax to pay down unpaid bills and stabilize state finances, he’s using the temporary income tax to fund more spending, including $1.3 billion on the new homeowners grant program, which is not property tax relief,” said Laurence Msall, the group’s president. “It’s a grant to state income taxpayers who own residential property in Illinois.

“We can’t support his budget,” Msall continued. “It won’t stabilize the state’s financial situation and may result in further downgrades by the credit-rating agencies.”

But Quinn’s administration defended the governor’s plan and disputed the claim that bond-rating agencies would punish Illinois if his spending package were put into place.

“All three ratings agencies issued encouraging statements about Gov. Quinn’s budget proposal, with Moody’s calling the property tax relief component ‘manageable,’” said Abdon Pallasch, Quinn’s assistant budget director.

“Gov. Quinn believes paying down the state’s backlog of bills is a priority, and that’s why we’ve worked to pay down the backlog by $5 billion dollars, and our plan returns us to a timely 30-day bill payment cycle,” Pallasch said.

In the House, lawmakers this week are prepared to begin passing pieces of what is expected to be a $38 billion budget for the 2015 fiscal year that begins July 1.

While the Civic Federation backs extending the 2011 income-tax hike for one year and then scaling it back, support in the Legislature for an extension appears tenuous. Despite Democratic supermajorities in each legislative chamber, passing a tax-hike extension in the House still appears iffy, even though the plan looks like it has enough support in the Senate.

If a tax-hike extension fails, that leaves open the possibility a resolution on the question won’t come until after the Nov. 4 election when lawmakers will know whether Quinn remains in power or Republican Bruce Rauner takes over after an election that essentially will act as a referendum on making the tax hike permanent.

The temporary income-tax increase is scheduled to begin rolling back in January, dropping from 5 percent for individual filers to 3.75 percent and from 7 percent to 5.25 percent for corporations. If the tax rates sunset, the state stands to lose $1.8 billion in revenues for the next fiscal year.

Like the bid to block that rollback, the property-tax rebate plan originally hatched by House Speaker Michael Madigan, D-Chicago, and included by Quinn in his budget address appears to be in equally perilous shape as lawmakers bear down on a scheduled May 31 adjournment date.