For the past decade, Springfield has been taking a substantial portion of revenue from Illinois municipalities, arguing that state government needs the money more than local taxpayers. Much of the revenue that cities, villages and counties count on to provide basic services comes from the state income taxes that are collected by the state and
For the past decade, Springfield has been taking a substantial portion of revenue from Illinois municipalities, arguing that state government needs the money more than local taxpayers.
Much of the revenue that cities, villages and counties count on to provide basic services comes from the state income taxes that are collected by the state and then redistributed back to local governments on a per capita basis.
These funds can amount to up to 20% of a town’s operating budget, or millions of dollars each year that are used to pay for such essential things as public safety (police and fire departments); transportation and storm/wastewater infrastructure (roads, bridges and flood prevention); and community health care and mental health programs.
These are the basic services that residents — regardless of where they live — pay for and expect. This revenue, which is cycled back to local governments through the Local Government Distributive Fund, reduces the need to increase property taxes, which in Illinois are already among the highest in the nation.
Local governments have been receiving a portion of LGDF for more than 50 years, but in 2011, Springfield increased the state income tax and also started taking a larger share of the local pie — dropping the agreed-upon 10% it gives back to just 6.06%.
This year, Gov. J.B. Pritzker has proposed taking an additional $152 million from the approximately $1.5 billion LGDF to fill the state budget gap. But as local mayors, many of us are facing our own budget challenges. The COVID-19 crisis and economic shutdown have wreaked havoc on local finances across Illinois. Absorbing and overcoming additional losses in LGDF money would be extremely difficult.
To make up for continued LGDF losses, towns will face the option of cutting services, laying off personnel or raising property taxes. Making matters worse, keeping LGDF payments at current levels places a heavier burden on towns that can least afford it — those already hurting from weaker tax bases (especially with main streets suffering) and sky-high property taxes.
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And while we welcome federal relief through the American Rescue Plan, those dollars amount to a one-time disbursement and have restrictions on how they can be spent. In other words, federal aid does not replace LGDF dollars and certainly doesn’t solve the long-term, structural problems that exist.
The best way to end this recurring fiscal battle and ensure some stability in the services residents rely on is for the state to restore LGDF funding to the agreed-upon 10% rate. Of course, it’s easy for the state to argue that it’s in no position to do that; however, if it continues relying on local funds to plug its own budget holes, Springfield will only face bigger, more difficult fiscal challenges down the road.
We understand the need to bring back some fiscal sanity to the state. But siphoning local revenue does nothing to fix an unsustainable system; instead, it merely shifts the burden by balancing the budget on the backs of local taxpayers.
Our nine regional councils of government representing 275 municipalities — including Chicago — are asking Springfield to do what it promised and, more importantly, to do what’s right. If we expect to reemerge from the pandemic, we need to make changes that will help reposition Illinois, including its 1,300 municipalities, for a brighter future.
Kevin Wallace is mayor of Bartlett and chair of the Metropolitan Mayors Caucus, representing 275 municipalities in metro Chicago.
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