The state Senate on Monday approved a $500 tax hike on the rich and the poor to fund infrastructure projects in Illinois, which is facing a historic drought.
The bill would raise the state’s property tax from 4.9% to 6.9%, the second-highest in the US.
Democrats and Republicans in the state Senate voted unanimously in favor of the hike.
“The current system has failed, the tax base has been drained, and we need to make sure that our state gets a boost,” said Senate President John Cullerton, a Democrat.
“If we want to keep this economy humming, we have to take this next step to help people who can’t or won’t pay.”
The Senate passed the measure by a margin of 48-43 on a voice vote.
The measure now goes to Republican Gov.
Bruce Rauner for his signature.
In addition to the new tax, the bill also includes: It gives the state the authority to impose a $250-per-day cap on the amount of state income tax collected in each calendar year.
The tax, which takes effect Jan. 1, will be paid by the average person on average income of $60,000, or by households earning more than $75,000.
And the tax will also be charged on the sales tax collected from individuals, businesses and non-profit organizations.
It increases the minimum wage to $15 an hour and increases the income tax rate from 4% to 7.9%.
The Senate approved the measure last month, after several days of debate.
Democrats in the Senate had pushed to raise the tax and the state income-tax rate.
But Republicans in opposition to the hike had argued that the state should be raising its own taxes.
The measure also includes $1.1 billion in new spending for transportation, including $1 billion for roads and bridges.
The money will also go toward improving water systems and providing more water services for Illinois.
The state’s top Democrat, state Rep. Jim Hodge, said the money would go toward projects in areas like education, mental health, health care and social services.
“We can’t do this in the shadow of the Great Recession and we’re going to try to keep our focus on helping people pay their fair share,” Hodge said.
“This is a big step forward for Illinois.”
But Rauners office has said the new taxes would not be enough to pay for the $2.2 billion needed to rebuild roads and improve water systems.
The Republican governor said he wanted to see what other states would do to make up the difference in revenue if the Illinois income tax hike is passed.
Rauners chief of staff, Tom Rielly, said in a statement the governor was “not interested in raising taxes on people who are already struggling.”
But Democratic Rep. Mike Zurbuchen of Lake County said the state would be spending more money on roads and other projects if it raised the state tax.
“There’s a whole bunch of projects that are not going to happen,” Zurbuch said.
“So this is an opportunity to actually help people.”