News

A recap of what the governor proposed

Posted February 20, 2008 10:00 pm

Saying times are tough, Gov. Rod Blagojevich Wednesday laid out a plan combining tax relief, spending cuts and a massive public works program to stimulate the economy and balance the state budget.

In a 22-minute speech that lacked detail, the governor proposed a one-time tax credit of $300 per child for Illinois families. He also wants to give corporations a one-time 20 percent break on their state income taxes.

"When times are tough, I believe the best way to fight for families and fight for people is to focus on strengthening the economy," Blagojevich said.

A $25 billion capital program will help do that, he said, chiding lawmakers to finally approve a plan that's languished for years.

However, Blagojevich added, "I will not raise taxes on people," an apparent reference to his earlier pledge to oppose increases in the income and sales tax.

The governor said his proposals will come at a price, in this case a 3 percent across-the-board budget cut for state agencies except those dealing with education, health care and public safety.

The following is a recap of what Blagojevich proposed:

BUSINESS

Businesses that paid corporate income tax for 2007 to the state of Illinois would receive a one-time 20 percent cut, a move estimated to cost $300 million.

Employers with 10 or more workers that spend less than 4 percent of payroll on employee health care would be assessed a 3 percent payroll tax. It's expected to generate $417 million and will be used to help pay for expanded health-care coverage.

CAPITAL SPENDING

A $25 billion Illinois Works program for roads, bridges and other capital projects would be supported with $11 billion in state funding.

The $11 billion breaks down into two pieces: $7 billion from the partial sale of the lottery and $3.8 billion in bonds.

AGENCY CUTS

State agencies - except for those dealing with health care, education and public safety - would see 3 percent across-the-board spending cuts.

CHILD TAX CREDIT

Parents would get some extra cash through the proposed Illinois Child Tax Credit.

The credit, which amounts to $300 per child, would go to Illinois taxpayers who qualify for the newly passed federal economic stimulus plan. The estimated 1.3 million eligible families must have a dependent child younger than 17 as of Dec. 31, 2007.

Income limits for a full credit are $75,000 a year for an individual tax filer and $150,000 a year for joint filers.

EDUCATION

Blagojevich's budget proposal calls for a $300 million boost in education funding.

That would be the smallest education-funding increase since he has been governor. Previous annual increases dating to fiscal 2004 ranged from $330 million to $560 million.

GAMBLING

The extra $300 million for education funding would come from gambling-related sources.

The state would increase tax rates on the riverboat gaming industry, and it would use some money from the anticipated sale of Illinois' long-unused 10th casino license.

PARTIAL LOTTERY SALE

The Illinois Lottery would be partially sold, a transaction expected to generate $10 billion to $12 billion.

The money would help pay for a capital plan and maintain existing revenues for education. The state would keep 20 percent ownership of the lottery, as well as regulatory authority of the lottery.

Compiled by staff writers Adriana Colindres and Doug Finke.

Article Categories
News