NY TIMES
With only hours left before new state lawmakers were to take over, Illinois’s State Legislature narrowly approved early on Wednesday an increase of about 66 percent in the state’s income tax rate.
The vast size of the increase, the rarity of such increases here — the last one came two decades ago — and the hour of the vote (in the wee hours of Wednesday) all reflected the urgency and depth of this state’s fiscal crisis.
Even grudging supporters of the tax increase, which won no Republican support in a state capital controlled by Democrats, voiced a desperate sense of regret over the circumstances in which Illinois finds itself. State Representative Elaine Nekritz, a Democrat who voted for the increase, described her decision as an alternative “between bad and worse.” Another Democrat cautioned his colleagues: “We don’t have a better choice today.”
Many states are struggling with anemic revenues and the prospect of an end to additional federal funds, but Illinois faces a budget deficit of as much as $15 billion, owes some $8 billion in unpaid bills to social service agencies, doctors, dentists and others, and is receiving mounting signs of worry from bond investors.
Under the legislation, the income tax rate would, at least temporarily, rise to 5 percent from its current rate of 3 percent. Lawmakers had talked about an even steeper increase, but set that aside as the hours went by and the debate grew increasingly emotional. The rate for corporate taxes would rise to 7 percent from its current rate of 4.8 percent. As part of the deal, the state’s spending growth would be limited from one year to the next over the next four years.