Illinois House passes $5 billion tax package


Illinois lawmakers fear credit downgrade

FBN's Tracee Carrasco on the states such as Illinois operating without a budget.

Illinois' Democratic-controlled House of Representatives passed big, permanent income-tax rate increases on Sunday with the help of some Republican votes as the cash-strapped state scrambled to piece together a budget and revenue plan to stave off a bond rating downgrade to junk.

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The $5 billion tax package, which passed in a 72-45 vote, would boost the personal income tax rate to 4.95 percent from 3.75 percent and the corporate rate to 7 percent from 5.25 percent. It would also close tax loopholes and expand tax credits. It now heads to the Democratic-led Senate for concurrence.

The country's fifth most populous state began an unprecedented third-straight fiscal year on Saturday without a complete budget. A fiscal stalemate between Illinois' Republican governor and Democrats who control the legislature has pounded the state's credit ratings to a step above junk and ballooned its unpaid bill backlog to $15 billion.