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State tax hike closer to a reality

The Illinois State Capitol Springfield. (AP file)

The Illinois State Capitol in Springfield. (AP file)

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Updated: May 18, 2011 1:37PM

SPRINGFIELD — Gov. Quinn and the two Democratic legislative leaders honed in on a potential tax-hike deal Tuesday that could raise the state’s share of workers’ paychecks to as much as 5 percent, a 66 percent jump.

Multiple options remained on the table and nothing had been finalized, but Quinn administration sources held out hope a tax-increase pact with House Speaker Michael Madigan (D-Chicago) and Senate President John Cullerton (D-Chicago) could be struck as soon as today.

Among the proposals discussed during two rounds of closed-door meetings between the three Democrats were increasing the individual income tax rate from 3 percent to 5 percent or increasing it by as little as one half of a percentage point. In both cases, the leaders were contemplating making at least part of the increases temporary, sources said.

Publicly, no one in the talks would divulge specifics on a tax plan, though Cullerton late Tuesday characterized both tax-hike scenarios as “pretty accurate.”

Madigan, meanwhile, was at his cagiest when asked whether a tax-hike deal was near.

“You know, for me to answer that question, why, it might put you in a position where you’re writing something that is inaccurate. I know you wouldn’t want to do that,” the speaker told reporters after advancing a proposed constitutional amendment to make pension sweeteners tougher to pass the Legislature.

Madigan — who would not commit to a tax vote this week — stuck to his guns that at least some Republicans must back any tax increase for it to pass.

“I think we expect there will be some support from the other side of the aisle,” the speaker said.

Apparent progress on tax-hike discussions came as Cullerton announced he had secured the votes to borrow $4 billion to cover Illinois’ pension obligations this year in a potential budget victory for Quinn.

The breakthrough gives new life to the governor’s stalled $4 billion borrowing plan, which passed the House earlier and would avoid the fiscal calamity of the state having to skip a multibillion-dollar pension payment this year.

Even though Cullerton has a 37-vote majority, two of his members have held out against the borrowing plan along with Republicans, leaving the package a vote shy of the 36 needed to pass the Senate.

“We believe we have the votes for that, and that’s what we’re going to be calling … this week,” Cullerton said.

Behind-the-scenes talks also remained under way toward crafting money-saving reforms to the state’s Medicaid and workers compensation programs — two Democratic initiatives that appear designed to help muster GOP support for a tax hike and borrowing.

Contributing: Stephen Di Benedetto

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