While the City has made many difficult budget decisions over the past few years, it’s unfortunate that the State failed to do the same. It is unacceptable for the State of Illinois to be solving its financial difficulties by usurping local revenues. Read the Tribune article about the State’s plan to “share” municipal revenues below:
Local governments unhappy with state plan for sharing income taxes
Highland Park and Deerfield react
Gov. Pat Quinn has proposed that the state bolster its own troubled finances by freezing the amount of state income taxes shared with local governments at 2012 levels, which could cost some towns hundreds of thousands of dollars.
Quinn estimates the plan would generate an additional $68 million for the state budget. Because income taxes are disbursed on a per capita basis, the impact to local budgetswould be $5.30 per resident, according to the state.
But the Illinois Municipal League estimates the impact would be more than twice that — a $148 million payday for the state, but an $11.50-per-resident cut to local budgets.
Either way, local leaders say their budgets should not be tapped to pay for the state’s shortfalls.
For Highland Park and its 29,763 residents, the municipal league’s estimate would mean the city would not get $342,275 that would otherwise be coming to it — or $157,743,using the state’s projection.
Mayor Nancy Rotering said that’s tantamount to the state reaching into Highland Park’s wallet and removing money that is budgeted to provide local services.
“The cities have made difficult decisions over the last many years and it’s unfortunate that the state failed to do the same, but it is absolutely not appropriate for them to access those funds,” Rotering said. “They are rightfully the municipalities’.”
In Deerfield, the loss equates to $209,587 based on the Illinois Municipal League estimate, or $96,592 based on the state’s.
Either number is tough to swallow, said Deerfield Mayor Harriet Rosenthal.
“They’re not doing their job. They’re kind of passing the buck,” she said. “We don’t spend $100,000 lightly. If you more than double that, we have to go back to the drawing board and try and figure out how we’re going to make it up.”
Illinois’ income tax, enacted in 1969, was meant to be a shared venture between the state and local municipalities, said Larry Frang, executive director of the Illinois Municipal League. Both the state and local governments alike felt the effects of any dips or spikes in revenue, he said.
Frang likened Quinn’s proposal to a stickup.
“You can’t start having one person rob another when times get tough,” he said. “When times get tough, everybody needs to be tightening their belts.”
State spokesman Abdon Pallasch said the Local Government Distributive Fund, which collects the municipal share of income tax revenue, is one of 80 funds that is on “auto-pilot,” and increases without legislative oversight.
“We think that all these funds, all the transfers out, should be subjected to the same legislative review that other parts of the budget are,” Pallasch said. “These, right now, are sort of a protected class that go up every year without legislative review.”
He disputed the Illinois Municipal League’s projections.
The state budget office estimates a 2.5 percent increase in the local share of income taxes for the fiscal year ending June 30, as well as a 3.7 percent increase the following fiscal year, Pallasch said.
Frang said that estimate is too conservative. In the nine months of the current fiscal year, actual local income tax revenue is up 7.3 percent, he said, adding that it is statistically unlikely to see sharp declines in the coming three months that would make the state’s 2.5 percent estimate accurate.
In fiscal year 2014, Frang said the municipal league factored an estimated job growth and wage increase to project a 6 percent income tax revenue gain — far above the state’s 3.7 percent projection.
That leads him to believe the actual impact of the governor’s proposal to be a $148 million decline in local income tax revenue.
“I think it’s clear that the bureau of the budget is wrong, but I don’t think I can guarantee you that we’ll hit my number,” Frang said. “But I think it’s more likely we’ll come closer to my number than anywhere near their number.”
Pallasch said the state is comfortable with its projections, that Frang is basing his on unofficial numbers, and “there’s more to it than just the rate.”
Mark Fowler, executive director of the Northwest Municipal Conference, which represents 41 municipalities in five counties, criticized the state’s budgeting philosophy.
“We can probably quibble over numbers, but really $1 is wrong in terms of taking money to solve the state’s problems and creating a precedent,” Fowler said. “If you just rip a hole in their (local) budgets, they have nothing to do but go back to local taxpayers to make up the difference.”