SPRINGFIELD -- Legislative leaders and Gov. Pat Quinn will meet Thursday to discuss boosting Illinois’ income tax rate from the current 3 percent to 5 percent as part of a package that also could include pension borrowing, a moratorium on new state programs, no new spending and property tax relief.

SPRINGFIELD -- Legislative leaders and Gov. Pat Quinn will meet Thursday to discuss boosting Illinois’ income tax rate from the current 3 percent to 5 percent as part of a package that also could include pension borrowing, a moratorium on new state programs, no new spending and property tax relief.


Perhaps as a first step toward attracting Republican votes for such a plan, the Senate Wednesday adopted a lengthy list of Medicaid reforms, a top GOP priority.


Senate President John Cullerton, D-Chicago, told reporters Wednesday night that raising the income tax rate by 2 percentage points is probably the most the legislature can accept.


“Hopefully, that’ll be the last meeting, because we have to have an agreement or we’ll run out of time,” Cullerton said.


Even if taxes are raised, Cullerton said, spending in the next budget year won’t go up.


“We have such a great loss in federal revenue dollars that we know that the spending can’t go up,” he said. “This is all premised on the fact that there will be no spending increases (and) a moratorium on new programs.


“What we’re trying to avoid is deficit spending,” Cullerton said. “That’s really what the fight’s about.”


The Senate will wait to vote on a proposal to borrow $3.7 billion to make the state’s pension payment this year, Cullerton said. Negotiations with Senate Republicans over a tax package will take place first, he said.


“We’re going to … see if we can resolve the tax matters first,” Cullerton said. “Then we can go ahead with that borrowing as part of the bigger package.”


Some form of property tax relief also might be part of any agreement, Cullerton said.


Sen. Donne Trotter, D-Chicago, mentioned the possibility of an income tax hike of as much as 2.25 or 2.5 percentage points, with an eye toward providing property tax relief and bolstering education spending when the economy recovers. Such a proposal would raise $8 billion.


“Yes, we do have a debt,” Trotter said. “But I think the people of Illinois also need to know that we are still chugging away as far as trying to make sure that we’re going to be educationally competitive with other folks. We still have to make investments in ourselves.”


The Senate on Wednesday did approve Medicaid reforms that sponsors said will save the state $800 million over the next five years. That bill now goes to the House.


Reforms of Medicaid and workers’ compensation have been Republican demands for years.


Both the House and Senate formed committees this fall to recommend changes in Medicaid and workers’ compensation that are intended to save money and make Illinois more business-friendly. Most observers also believe Democratic leaders formed the committees to win Republican support for a tax increase and borrowing.


Sen. Dale Righter, R-Mattoon, co-chairman of the Medicaid reform committee, said the Medicaid proposal didn’t change his mind about pension borrowing. He’s still against it.


“This (Medicaid) is an issue unto itself,” Righter said. “This is not a trading card in other areas of public policy.”


The Medicaid reforms contained in House Bill 5420 are expected to save the save about $800 million over five years. The state spends at least $8 billion a year on Medicaid, which has about 2.8 million participants.


Sen. Chris Lauzen, R-Aurora, said $160 million in yearly savings falls short when the cost of the program is rising by $800 million a year.


“That’s bankruptcy folks,” Lauzen said.


However, Righter said the savings estimate is conservative and he expects the reforms will produce much greater savings.


 


Chris Wetterich can be reached at (217) 788-1523. Doug Finke can be reached at (217) 788-1527.


 


Medicaid reform plan


*Requires that 50 percent of Medicaid recipients be in managed care programs by 2015.


*Sets the income level for participation in the All Kids program to 300 percent of the federal poverty level, or about $66,000 per family.


*Ends the practice of automatically re-enrolling participants once they are part of Medicaid. They will be required to annually prove they are still eligible.


*Places a two-year moratorium on expanding eligibility for participation.


*Allows pharmacies to provide 90-day supplies of some maintenance drugs.


*Creates civil penalties for Medicaid fraud.


*Phases out the practice of paying Medicaid bills from one budget year with revenue from the following budget year.