CHICAGO — In a symbolic test vote, Illinois House members unanimously rejected Gov. Rod Blagojevich’s new $7.6 billion gross receipts tax on businesses — the cornerstone of his proposed $49 billion fiscal 2008 operating budget.
Democratic House Speaker Michael Madigan of Chicago scheduled the vote on the nonbinding resolution asking members whether they support the tax, following a hearing a day earlier during which the Democratic governor warned lawmakers that the state faces deep cuts without the new revenue source. The final vote totaled 107 against the tax with seven voting present.
A stream of opponents and supporters also voiced their opinions. Supporters believe it more fairly spreads the burden of state funding among large businesses, some of which now pay little corporate income taxes, while its detractors argue it would be passed on to consumers and drive businesses out of the state.
As it became apparent yesterday prior to the vote that the resolution would fail, Blagojevich shifted gears and issued a statement urging lawmakers to cast a no vote on the premise that more time is needed for continued discussions.
“Yesterday was a good and productive start to the budget discussion in the House of Representatives,” Blagojevich said of the Wednesday hearing. “Considering that this meaningful dialogue was initiated just 24 hours ago, it would be premature to conclude the discussion today and ask members to make a decision before they have an opportunity to get answers to their questions and offer their ideas.”
While the Democratic governor enjoys majority Democratic control in both the House and Senate, opposition to the gross receipts tax is bipartisan and widespread. Senate President Emil Jones, D-Chicago, however, has endorsed it and the measure cleared a committee vote earlier in the week.
Support is building for an alternative proposal that includes raising the state personal and corporate income tax and extending the sales tax to cover services with a property relief component, but Blagojevich reiterated his position at the hearing Wednesday against either measure, which he believes is too burdensome on individuals.
“We can do this and do big things for the people of our state, or we can sit back and do nothing,” the governor said, adding that the state faces $1 billion of “devastating” cuts without an infusion of new revenue.
Blagojevich has indicated he’s willing to negotiate the terms of GRT that would be imposed on businesses with more than $2 million in revenues, but some lawmakers believe the pledge is disingenuous.
“You’ve shut those other options down. You say, ‘Well, I’m here to compromise, but the only thing I’ll talk about is [the GRT],’ ” Rep. Lou Lang, D-Skokie, told the governor at Wednesday’s hearing.
While the tax — at least in its current form — appears dead, it’s unclear how it would affect the overall budget that covers the fiscal year beginning July 1 and the General Assembly has just a couple more weeks to go before its scheduled adjournment of May 31.
Blagojevich wants to use the new tax revenue to pay for a universal health care system, new education spending, a bond program for education and transportation, and property tax relief. A portion of the funds would replace the $600 million in annual profits now generated by the state lottery that go to education, freeing the governor to privatize the Lottery in at least a $10 billion transaction. The state would use that money, plus the proceeds of $16 billion in taxable general obligation pension bonds to cut the state’s $41 billion unfunded pension liability.
