Lawmakers rejected it Friday morning on a vote of 107 to 5. Only Democrats voted for the plan. House Speaker Michael Madigan says he'll have Democrats work on a new version of the budget for next week.
"Democrats generally are not interested in reducing government, and providing less help for people. They're not interested in that. And so a Democratic vote on the budget this morning should not be a surprise," says Madigan.
The income tax rate is scheduled to drop from 5 percent to 3-and-three-quarter percent in January. That would reduce state revenue by nearly two billion dollars.
Democrats say the increase must be extended to protect education and social services. Republicans oppose the tax hike. They voted no because they say lawmakers could build a better budget.