CHICAGO - The Republican candidate for Illinois governor unveiled a proposal to overhaul the state's tax system that calls for phasing out the state's 2011 temporary income tax hike, expanding the sales tax, and freezing property taxes.
Candidate Bruce Rauner said his plan would improve the state's economic and business prospects. "We can restore Illinois as an economic powerhouse by eliminating the Quinn-Madigan tax hike, freezing property taxes, and ending the regulatory burdens that are crippling our job creators," Rauner said. He was referring to Gov. Pat Quinn, a Democrat who is seeking re-election, and Democratic House Speaker Michael Madigan of Chicago.
Rauner said he would phase out the income tax rate hikes over four years, bringing them down from 5% to 3 % for the personal rate and from 7% to 4.8 % for the corporate rate. A portion of the rate hikes approved in 2011 begin to expire on Jan. 1. Quinn pressed lawmakers to make them permanent, but the plan failed. Lawmakers are expected to revisit the issue after the November election.
The state expects a nearly $2 billion drop in revenue in fiscal 2015 due to the partial expiration and $4 billion in fiscal 2016.
In Rauner's plan, some of the lost revenue would be made up by broadening the sales tax to cover some non-essential services to raise $600 million in annual revenue. Rauner said his plan offers a long-term solution for the state's fiscal trouble compared to what he called "Band-Aid" fixes offered by the state's Democratic leadership.
Under his plan, any future property tax hikes at the local level would require voter approval.
Quinn's campaign spokeswoman Brooke Anderson slammed the plan and the length of time it took Rauner to release details of his fiscal proposals.
"Under Rauner's policies, Illinois would face a nearly $10 billion budget hole next fiscal year, which would cause radical cuts to education, public safety and health care services," she said.
The tax plan is Rauner's second major fiscal announcement during the campaign.
Last month he outlined plans to cut $1 billion in spending to help balance the state's books without revenues from the expiring income tax hike. Rauner said he would save $500 million through state purchasing cuts but did not offer specifics on what he would trim. He said another $250 million could be saved by cracking down on Medicaid eligibility and other reforms.
Rauner said he would eliminate state shuttles for lawmakers and the governor and sell the existing state planes, cut lawmakers and state constitutional officers' pay by 10%, shift lawmakers to a defined-contribution plan, and merge the state comptroller and treasurers' offices. He said he would not take any pay or a pension as governor. Rauner also wants to curtail outside employment for legislative leaders.
The plan did not address two large costs for the state, education and pensions. Rauner's campaign says he will release additional proposals and policy initiatives to restructure state government and improve the state's economy in the coming weeks.
