Metro West Council of Government and its 34-member municipalities are extremely disappointed with Governor Rauner’s proposal to severely slash in half our local government’s share of the state income tax. The governor’s proposal, announced during his February 18 Budget Address to the Illinois General Assembly, would raid the Local Government Distributive Fund (LGDF), reducing local community revenues by approximately $50 per person.
The Metro West COG represents municipalities throughout Kane, DeKalb and Kendall Counties—from large cities such as Elgin and Aurora, to mid-sized municipalities such as the Tri-Cities, DeKalb and Oswego, to small villages such as Plattville and Kaneville. This reduction in funding would represent a direct loss of approximately $37.5M for the 750,000 residents in our 34 member communities.
With this move, Governor Rauner would be fixing part of the state’s financial problem at the expense of local governments and the necessary services that they provide to residents. “This will be catastrophic to our budget and the budgets of countless local governments,” said President John Schmitt of Algonquin. Algonquin is estimated to lose almost $1.5M in revenues if the LGDF reduction is approved. The Village of Oswego also stands to lose approximately $1.5M, representing a 9-percent reduction in the village’s general fund. Oswego Administrator Steve Jones noted that the proposal “would likely lead us to consider alternative revenue and expense options.”
Local governments count on LGDF funds to operate their municipalities. When the Illinois state income tax began in 1969, the state asked local governments to forego enacting a local income tax with the understanding that the municipalities would instead receive 10-percent of the income taxes that the state collected from the residents within their jurisdiction. It is true that other states’ governments may share a lower percentage of income tax with their local municipalities. However, the governor has failed to recognize that in other states, individual municipalities have the ability to implement local income tax. Obviously, that is not the case in the Illinois.
The idea that the governor would not only strip half of the money earmarked for local services, but also suggest freezing property taxes, is devastating to Illinois municipalities. In essence, this would leave non-home rule communities with no way to replace the funds that pay for essential public services such as police and fire protection, snow plowing, infrastructure projects, and street maintenance and repairs. This leaves local governments in an impossible situation that is likely to result in a reduction of services to residents, staff cuts and increases in taxes and or user fees to offset the loss in funding that was promised to be returned by the state to our communities.
“Since 2007, the city of Elgin has balanced its budget, resolved a structural deficit, cut staff, searched for efficiencies, diversified revenue and lowered property taxes,” said Elgin Mayor and Metro West COG President David Kaptain, whose city is in line to lose $5M per year due to the proposed cuts—or the cost to fund three of the city’s seven fire stations. “Elgin is representative of many communities in Metro West. We have done what was necessary to provide services and be fiscally responsible to our residents. The reduction in LGDF could undo all our efforts.”
Municipalities are well aware of the state’s budget difficulties as local governments have had to adjust to extremely difficult financial realities. Local governments are not sitting on $15 billion, as the governor suggested. Most of the funds that municipalities have in reserves are either restricted and can only be used for specific purposes, or are necessary to cover operating costs when the state does not make timely payments or in cases of emergencies. Municipalities are required to operate in a fiscally responsible manner and, therefore, are required to adopt and operate with balanced budgets. Due to the recession combined with masses of unfunded state mandates (most recently the minimum manning legislation and changes to pension law) staff was cut, services reduced and budgets slashed. Significant sacrifices have already been made to balance those budgets. Many municipalities across the state have yet to recover from the recession.
We respectfully acknowledge the serious challenges the governor faces, however the state should not balance its own budget on the backs of those who have employed sound financial practices all along. We look forward to working cooperatively with the governor on future legislative issues.
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Metro West members include: Algonquin, Aurora, Batavia, Big Rock, Burlington, Campton Hills, Cortland
DeKalb, East Dundee, Elburn, Elgin, Geneva, Gilberts, Hampshire, Hinckley, Kaneville, Lily Lake,
Maple Park, Millbrook, Minooka, Montgomery, Newark, North Aurora, Oswego, Pingree Grove, Plattville, St. Charles Sleepy Hollow, South Elgin, Sugar Grove, Virgil, Wayne, West Dundee, Yorkville
**Editor’s Note: Metro West Council of Government will hold a press conference at 9:30 a.m. on Tuesday, February 24 at Gaslite Manor, 2485 Church Road in Aurora.
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