A bill that would increase the share of state income tax revenues going to municipalities has passed the state House of Representatives but faces an uncertain future in the state Senate as the legislature and Governor Bruce Rauner continue to squabble about the state budget.
In the most recent fiscal year, Forest Park received nearly $1.5 million from the Local Government Distributive Fund (LGDF), a little over 8 percent of its general fund revenues. Currently 8 percent of state individual income tax revenue goes into the LGDF and 9.14 percent of state corporate income tax revenue goes into the fund. The money in the fund is distributed to municipalities and counties on a population-based formula.
The bill that passed the House on March 7 on a 67 to 47 vote would gradually increase the share of state income tax revenue going to the LGDF to 10 percent in 2020. The share was 10 percent until 2011 when it was cut following a two-year rise in the state income tax. The contribution rate to the LGDF was cut during that two-year period so the cash-strapped state could keep all the additional revenue raised by the temporary increase in the state income tax. Now that income tax rates have gone back down to their previous level, the percentage going to the LGDF should also go back to its prior level, supporters of the bill say.
“I’m hoping to be able to restore those funds,” said State Sen. Kim Lightford (D-Maywood) who said she will support the bill in the Senate.
Municipalities use money from the LGDF to help fund basic services, Lightford said.
“Most municipalities use those funds for their police and their fire departments,” she added.
Forest Park Mayor Anthony Calderone, not surprisingly, favors the prospect of getting more revenue from the state.
“We would not turn it away,” he said.
However, the bill’s prospects for becoming law do not appear great as the state faces an unpaid bill backlog of $12.6 billion and is now in its third year without a budget.
“As a mayor we’d love to have more funding on the local level,” said state Sen. Steve Landek, who also serves as the Mayor of Bridgeview. “However, being realistic, the state doesn’t have any money to give anybody. We can’t pay our bills, let alone increase the funding level.”
Landek also pointed out that even if the bill passed the Senate, Gov. Rauner would probably veto it.
Only three Republicans in the House voted in favor of the bill and two years ago Rauner proposed cutting the state contribution to the LGDF by 50 percent and some would like to eliminate the LGDF altogether.
“The state doesn’t have $300 million lying around to give to local government,” said Diana Rickert, vice president of the Illinois Policy Institute, a free market-oriented think tank that advocates for reduced government spending and lower taxes. “It has a $12 billion backlog of bills, a deficit coming at the end of this fiscal year, and literally hundreds of billions of dollars of pension debt. This money is not real so I don’t see why the legislature would think it’s a good idea to promise it to these towns when it doesn’t exist.”
Forest Park Village Administrator Tim Gillian said he worries about a reduction in, or the elimination of, the LGDF.
“For the last several years, we’ve been on high alert waiting for these guys to cancel this fund altogether, or to cut it by 50 percent,” Gillian said. “You can never tell with the state of Illinois what they’re going to do.”
Gillian said that if the LGDF is eliminated or cut significantly, the village would face some tough choices.
“We would have to start looking significantly at layoffs and things of that sort because employee wages and benefits are 60 to 70 percent of our annual budget,” Gillian said.
Because it is not a Home Rule community, Forest Park has limited options to raise revenue to counteract any cuts in state aid.
Because of a change in state accounting, Forest Park is on pace to receive about $120,000 less from the LGDF in the fiscal year ending at the end of this month than it received in fiscal year 2016.
This story has beeen changed to correct wording of a quote by Dianan Rickert concerning the total amount of Illinois pension debt.