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March 4, 2013

Closer Look: Many challenges as Quinn inks budget

(Continued)

Quinn has said he doesn't approve of sweeping or borrowing from special funds, so it's unlikely he'll call for doing so in the coming budget year. But legislators have eyed the funds in the past, and could do so again.

A lagging economic recovery

A report prepared by Moody's analytics in January found that after a promising start to the recovery, Illinois is one of a handful of states in danger of slipping back into recession. The main culprits, Moody's found, are slow job growth and a soft housing market.

Those factors are leading state officials to be conservative when projecting revenues for the coming budget year, Jim Muschinske, revenue manager for the Illinois Commission on Government Forecasting and Accountability, told a House committee last month. The commission predicted the next fiscal year "will be saddled with continued struggles related to employment gains and overall unspectacular economic performance."

Even if the economy takes off, Muschinske said, it took Illinois a long time to get to where it is, and it will take a long time to get out.

"Clearly, things are not going to turn around overnight," Muschinske said.

Tax increase

Looming over any budget discussion is one date: Jan. 1, 2015. That's when the individual income tax increase that lawmakers approved in 2011 is set to expire. The increase has generated about $6 billion per year.

Quinn's main focus has been on solving the pension problem, and with him facing re-election in 2014 it would be politically unwise to bring up the subject of extending the tax increase beyond 2015.

But at least one legislative leader, Rep. Lou Lang, a Democrat from Skokie and deputy majority leader in the House, already has proposed making the tax hike permanent as a way to deal with the pension crisis, and other lawmakers have talked about it.

It remains to be seen whether there will be a significant push for it this year.

 

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