Signaling his interest in taxing residents more as their incomes rise, Gov. Pat Quinn said Thursday he will push to rework Illinois' taxes to at least maintain education funding as the state faces a massive budget shortfall.

"We are going to overhaul the tax system," Quinn told reporters after speaking before more than 1,000 members of the Illinois Education Association, which represents teachers across the state.

The comments come days before he is set to lay out his budget proposal for the state as it struggles with a $9 billion shortfall that is leading to stacks of unpaid bills for hospitals, schools and social service providers.

While Quinn refused to explicitly outline his looming tax proposal, he told teachers that "citizens are not happy with the tax systems that are not based on ability to pay." His plan will show "that I'm willing to stick my neck out and take big chances on behalf of the kids of Illinois," he said, drawing applause from the teachers at the Rosemont conference.

Later Quinn did specifically say he would push to increase income tax exemptions, potentially moving Illinois away from its current flat tax rates that have rich and poor residents paying the same rates.

"That (tax exemption) is a very important thing we need to use in Illinois much more creatively than we have in the past," Quinn told reporters.

The Chicago Democrat said an increase in exemptions would reduce the tax burden for those who "live paycheck to paycheck." He declined to detail the size of the exemption he will propose in his budget speech next week.

Any move to increase taxes overall, especially in the struggling economy, will likely face stiff opposition from anti-tax groups and a Republican Party looking to gain popularity in advance of next year's statewide elections.

"It will destroy jobs," Jim Tobin, director of the National Taxpayers United of Illinois, said of any income tax increase.

Many suburban lawmakers have traditionally opposed taxing higher-income residents more than lower-income residents.

Residents in several suburbs would likely disproportionally shoulder the burden under such a tax plan, including Barrington, Naperville, Lake Zurich and Sugar Grove, according to a review of income taxes paid by select suburban ZIP codes in 2003, the latest available data on the Illinois Department of Revenue's Web site.

However, others may benefit as lower income residents could be paying less tax. For example, in 2003 the average income in Round Lake, Elk Grove Village and Addison fell below the state average of $63,487.

The Illinois Constitution requires a flat income tax rate, but some lawmakers and tax advocates believe there's a relatively easy way around that. Lawmakers could increase the across-the-board rate but build in significant credits and exemptions to lower end households, in effect creating a system that taxes higher wage earners more while keeping a flat rate on the books.

State Sen. Donne Trotter, a Chicago Democrat involved in budget negotiations, said one proposal on the table would increase the income tax to 5 percent from 3 percent in order to raise $7 billion while using expanded credits to target the increase at higher incomes.

All of Illinois' neighboring states have tax rates that target higher incomes with higher rates. Even among the few flat tax states, Illinois' tax is the lowest.

"We simply don't tax the right way," said Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability.

Martire acknowledged that this approach is an end-run around the state Constitution. He said in a "perfect world" there'd be an amendment, but that takes time Illinois no longer has.

"We don't live in a perfect world. We live in Illinois," he said.

Martire's group has long been the leading advocate of raising and expanding state taxes and using the new billions to overhaul education funding and reduce the reliance on local property tax dollars.

The Illinois Education Association supports raising income taxes to offset a reduction in the reliance on property taxes to fund schools. The reliance on property taxes leaves fewer dollars for education in poor neighborhoods.

Quinn said Thursday he supports the teachers union's goals while not explicitly saying he would back a so-called "tax swap" that would provide homeowners with property tax relief in exchange for higher income taxes.

"In terms of reforming school funding in Illinois ... it is going to be a herculean task," Quinn said. "We have to work together. This is a cause I do believe in."

Quinn pledged not to cut education funding. "We aren't going to cut back on education," he said.

Illinois Education Association President Ken Swanson said he was encouraged by Quinn's words, however unspecific.

Daily Herald staff writer Dan Carden contributed to this report.

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