Illinois’ Democratic-controlled House of Representatives passed big, permanent income-tax rate increases on Sunday with the help of some Republican votes as the cash-strapped state scrambled to piece together a budget and revenue plan to stave off a bond rating downgrade to junk.
The $5 billion tax package, which passed in a 72-45 vote, would boost the personal income tax rate to 4.95 percent from 3.75 percent and the corporate rate to 7 percent from 5.25 percent. It would also close tax loopholes and expand tax credits. It now heads to the Democratic-led Senate for concurrence.
The country’s fifth most populous state began an unprecedented third-straight fiscal year on Saturday without a complete budget. A fiscal stalemate between Illinois’ Republican governor and Democrats who control the legislature has pounded the state’s credit ratings to a step above junk and ballooned its unpaid bill backlog to $15 billion.
The House-passed bill would give the state a revenue boost to support a full-year budget and start paying down the bill pile that was on track to grow even larger after a federal judge on Friday ordered increased payments on Medicaid provider bills.
The long, emotional debate included a harsh partisan rebuke from some Republicans who defied their party’s governor, Bruce Rauner, who has insisted for two years that a budget be coupled with a property tax freeze, legislative term limits and changes to how injured workers are compensated, among other things.