Elvyn Diviky blog

After 67 Percent Tax Hike Last Month, Ill. Governor Wants to Borrow $8.75 Billion

COMMENTARY | Just a few days agoIll. Governor Pat Quinn was trading potshots with N.J. Governor Chris Christie over which state was in worse financial condition.New Jersey's bonds were downgraded recently, and just last month Quinn pushed through a 67 percent tax increase that affects both individuals and corporations.

Now, however, thehas reported that Quinn has admitted that even with the expected influx of income taxes, which is already being withheld from paychecks across the state, he still needs a loan of $8.75 billion to pay 36,000 vendors.Sounding a bit like a political Madoff peddling a pyramid scheme, Quinn plans to pay back the loan with the money raised by the income tax hike.

More disturbing?Quinn and his staff have declined to say just how far off from their annual budget his administration is.It could be $3 billion, which means that with the $8.7 billion the total deficit between income taxes raised and expenses is a whopping $12 billion.

Rumor also has it that Quinn wants to try to raise cigarette taxes as well.The governor also has his staff working on ways to slash human services funding and state employees.

Illinois's financial situation is so bleak that House Speaker Michael Madigan (D-Chicago) has even suggested cutting pension benefits for current state employees, which may be unconstitutional in addition to radical.

Although Illinois residents are currently tightening their belts thanks to the recent income tax rate increase for individuals from 3% to 5%, the law that put that rate increase in place came with a cap that limits how much the state can spend in each of the next three years.

Chicago's localaffiliate has speculated that while the cap on spending this year has left the state with enough room to spend the $7 billion expected to be raised, future years could be problematic.Expenses may increase to the point where discretionary spending must be cut.

Despite the over the top theatrics from Quinn, a clear plan to keep the state of Illinois from devolving into a similar financial disaster in the future is yet to be announced.Without a change in the way that Illinois allocates its funding to different state agencies, it is impossible to know where all these billions of dollars that Quinn is requesting will go - or where so many billions have already gone.