Gov. Jim Edgar said Monday that Republicans were warming to the idea of increasing the state’s cigarette tax as a way to reduce a controversial tax on hospital patients and nursing-home residents.
Meanwhile, Senate President James “Pate” Philip backed down on his demands for Cook County property-tax caps, saying he would agree to put the issue on the 1994 county ballot instead.
Edgar met with Philip and House GOP leader Lee Daniels of Elmhurst and said he was surprised that a Philip-backed plan to raise state cigarette taxes had not drawn an expected cascade of opposition.
“I have to say there’s been less negative comments than I thought. Hearing from a variety of people, it seems more acceptable than some of the other alternatives out there,” said Edgar, who tried to raise the tax on other tobacco products last year but failed.
“I think most of us would rather, maybe, deal with a cigarette tax than having nursing-home patients pay more.”
Philip, a Wood Dale Republican, had said he believed a 70-cent per pack tax increase on cigarettes-raising the state’s tax to $1 a pack-would generate roughly the $500 million needed to finance Medicaid health-care coverage for the poor in the next fiscal year.
But a bipartisan economic panel warned that a 70-cent per pack tax boost would raise only $300 million.
Since then some proponents have scaled back their plans. Instead, they are looking at a 50-cent per pack increase to raise at least $170 million.
That would be used to help eliminate the politically unpopular $6.30 per day charge on private-paying nursing home residents known as the “granny tax.”
Edgar also said he and Republican leaders had moved closer on a unified plan for making permanent the state’s .25 percent income-tax surcharge and distributing the proceeds.
Edgar originally proposed continuing the surtax, which is to expire June 30, while diverting $211 million in revenues now going to municipalities to the state treasury.
The tax is almost certain to be extended. Negotiations have involved how the tax dollars will be split between state and local governments.
“I think we’ve made movement. The Republicans have made movement,” Edgar said, declining to be more specific. “We’ll have to see if the Democrats will meet us halfway.”
But as work continued on the budget for the fiscal year that begins July 1, Democratic Comptroller Dawn Clark Netsch sounded warnings over state tax revenues for the current fiscal year.
Netsch said that while the state will be able to repay its short-term borrowing, sales tax revenues are lagging behind the Edgar administration’s forecasts.
She also said the carry-over of current unpaid bills into the next fiscal year could exceed the $919 million Edgar had anticipated.
Philip’s move on Cook County tax caps is a major concession by the GOP, which had made the caps a priority this session. But it also could make it easier for Edgar and the state’s four legislative leaders to hash out a final deal on the 1994 budget by taking the issue off the negotiating table.
Philip has made it clear that he wants to adjourn the session by Friday, a month earlier than usual.
He acknowledged his office has talked with aides to Democratic House Speaker Michael Madigan of Chicago about putting the real-estate tax cap proposal on Cook County’s 1994 general election ballot as a nonbinding referendum.
That proposal falls far short of Philip’s initial demand that the tax caps, now in effect in the collar counties for two years, be expanded to suburban Cook County.
Though Philip’s plan would not impose the tax limits, it would likely increase Republican turnout in the 1994 election and help Edgar’s expected re-election bid.
Still, aides to Madigan, an adamant opponent of real-estate tax caps, were cool to the offer.
“I don’t think that has a lot of appeal right now,” said Madigan spokesman Steve Brown.
Philip, however, said Madigan has been working on language for a possible ballot question dealing with tax caps.
