Democratic House Speaker Michael Madigan said Thursday he will endorse a plan to extend the state`s temporary 20 percent income tax surcharge for another two years and intends to seek a vote on the proposal next week.
Madigan`s plan, which also may include elements of a Democrat-backed proposal to provide income tax relief to low- and middle-income families, came as he and other leaders in the General Assembly agreed on nearly $400 million of the $1.5 billion in cuts proposed in Republican Gov. Jim Edgar`s budget.
Although the agreement on specific cuts marked at least a temporary end to one political stalemate between Edgar and Madigan, the Chicago Democrat`s proposal on the surcharge could set up another.
With more than two weeks left in the legislature`s spring session, Edgar, who campaigned on a platform of making the surcharge permanent, is unlikely to agree at this time to only a temporary continuation of the tax.
And another Edgar campaign-driven plan to curb skyrocketing property taxes-an issue viewed as a key Republican bargaining chip in exchange for supporting an extension of the surcharge-is not part of Madigan`s proposal.
Madigan`s desire to advance any form of a surcharge plan ends months of personal silence on the tax levy, which he authored two years ago and steered to passage.
Madigan said he was ”moving forward” with the proposal, although he said final details of the plan had yet to be worked out.
Madigan`s plan to seek only a temporary extension of the income tax surcharge reflects the feelings of a large segment of his 72-member caucus that the new governor should be forced to come back to lawmakers to renew the surcharge in 1993. The timing of such a request would come shortly before an expected Edgar re-election bid, renewing political pressure on a first term GOP governor.
It also could allow for the prospect of trading surcharge votes for legislative pork projects-if the state`s fiscal condition has improved by then.
Madigan`s proposal also would not alter the current distribution of the roughly $700 million in revenue derived from the surcharge. Currently, surcharge proceeds are divided roughly evenly between education and local governments.
Edgar has proposed that the local government share of the surcharge be reduced, or even temporarily suspended, to replenish the state treasury, to provide education with an extra $50 million in funding next fiscal year and to help get state government get caught up on overdue bills owed to health-care providers to the poor.
An Edgar aide said that maintaining the current distribution formula would be something that the governor ”would never agree to.”
Madigan also said his proposal may contain elements of the so-called
”Families First” plan unveiled last month by his chief of staff and state Democratic Party Chairman Gary LaPaille. Components from the plan that might surface in Madigan`s proposal include a working-family tax credit for low-income households with children and graduated income tax deductions based on earnings.
Madigan`s decision to agree to $384.5 million in cuts proposed by Edgar marked the first time the Democratic speaker has shown a willingness to go along with at least some of the Republican governor`s budget recommendations. But the agreed-to cuts did not address the highly-charged issues of trimming education or public aid, the latter of which is the target of the most drastic cuts in Edgar`s original budget plan.
Madigan`s proposed cuts incorporate 13 of the 23 measures that were originally part of Edgar`s plan but were stalled by the Democratic majority in earlier House deliberations. Both parties agreed that the 13 measures were among the least controversial and that up to $1 billion in tougher cuts will still be needed.
”It`s a first step and I`m glad the speaker is going to join in now,”
said Edgar. ”But this is like the first . . . of the cuts we`ve got to talk about. It gets tougher.”
The most severe of the agreed-to cuts would be borne by senior citizens and the disabled, for whom state ”circuit breaker” assistance to purchase prescription drugs would be capped at $400 per year. Madigan`s staff estimated the savings at $46 million.
But the biggest savings would come from repealing a state law requiring the state to pay health-care providers to the poor within 30 days or pay a 2 percent penalty for tardy payments. With providers now facing payment delays exceeding 100 days, Madigan estimated the savings would be $233 million.
The delays prompted Treasurer Pat Quinn to announce an emergency loan program Thursday, providing $100 million in state deposits to banks that will make low-interest loans to affected health-care providers.
Other budget cuts agreed upon include $45 million to be saved by ending a quality incentive program for nursing homes and $27 million from a minor restructuring of some Medicaid programs. More cuts would come from measures releasing excess cash from dedicated state funds and capping state sales tax rebates to tax increment financing districts.
Madigan said he also asked House spending panels to cut $50 million from the state`s smaller agencies.
”I`m not convinced they can,” said Senate President Philip Rock (D-Oak Park). ”I`ve asked my chairmen not to engage in those kinds of arbitrary cuts at this time.”
The agreement on specific cuts came as the legislature`s financial forecasting arm, the Illinois Economic and Fiscal Commission, lowered its estimates of state revenues for the current fiscal year by $98 million and reduced its fiscal 1992 estimate by $78 million.
