Southland leaders drive debate over share of state tax funds
State lawmakers and municipal leaders are at odds with Gov. J.B. Pritzker over sharing state revenue with local governments.
Members of a broad coalition say cities and towns could beef up public safety and ease the property tax burden on homeowners if Pritzker would loosen the purse strings a little more.
“Springfield has taken advantage of local tax revenue to plug gaps in budgets, but this is a process that needs to stop,” said state Rep. Anthony DeLuca, D-Chicago Heights.
DeLuca chairs the House Cities and Villages Committee. Back in October he sponsored House Bill 4169, which seeks to restore the level of state dollars divvied out to municipalities through the Local Government Distributive Fund, or LGDF.
“If we don’t take action, more costs will be passed down to homeowners who are struggling,” DeLuca said. “I’m hearing from too many families across our community who are hurting. It would be irresponsible to ask for more from them.”
DeLuca’s bill is gaining momentum, like a toboggan hurtling down a sledding hill. Dozens of lawmakers have signed on as co-sponsors, including state Reps. Bob Rita, of Blue Island, Thaddeus Jones, of Calumet City, and Kelly Burke, of Evergreen Park. Even Republicans like state Rep. Tim Ozinga of Mokena are on board.
House Speaker Chris Welch of Westchester is among the 40 co-sponsors, as are Southland state Reps. Marcus Evans, Frances Ann Hurley and Nick Smith of Chicago, Will Davis of Homewood and Debbie Meyers-Martin of Olympia Fields.
Two different committees are set to hold a joint hearing on the bill Thursday morning in Springfield. Groups representing hundreds of municipalities have stepped up a messaging campaign designed to pressure Pritzker to funnel more state funds to local
governments this year.
“Our members reluctantly dealt with reductions in LGDF and changes to the revenue-sharing formula, previously made in tandem with income tax increases that effectively froze LGDF, as a shared sacrifice during difficult economic times,” leaders wrote in a Jan. 25 letter to Pritzker.
“We believe our members stood with the state when asked,” they wrote. “Those times have passed. The state is realizing economic recovery that must be shared.”
Leaders of groups representing a majority of the state’s 1,296 municipalities signed the letter. They included Chicago Mayor Lori Lightfoot, who also is vice chair of the 275-member Metropolitan Mayors Caucus, and Decatur Mayor Julie Moore Wolfe, president of the Illinois Municipal League.
Thornton Mayor Bob Kolosh signed on behalf of the South Suburban Mayors and Managers Association. Palos Park Mayor John Mahoney signed as chair of the Metropolitan Mayors Caucus. Palos Hills Mayor Gerald Bennett signed for the Southwest Conference of Mayors.
Lockport Mayor Steve Streit signed as president of the Will County Governmental League. Others represented DuPage, Lake and McHenry counties and other areas of the state.
The Southland is well represented in the debate. The region’s booming growth in logistics reflects its strength as an economic engine for the state. The region is flexing its muscle as a job creator and tax generator. The outcome of the LGDF battle will be a measure of political clout.
Advocates have been organizing for months and are mobilizing to fight for a greater share of distributive fund revenue during the budget process this spring. Last week, when he unveiled his budget, Pritzker proposed cutting taxes by up to $1 billion, which would seem to threaten hopes for more funding this year.
When the Local Government Distributive Fund originated in 1969, the state doled out 10% of income tax revenues to municipalities. The percentage dipped as Illinois faced years of financial crises. Currently, the state allocates 6.06% of individual income taxes and 6.85% of corporate income taxes to communities.
DeLuca’s bill would increase rates this year to 8% for individual taxes and 9.11% of corporate income taxes.
“This is money that goes toward critical services, including funding for first responders and road repairs,” DeLuca said. “Particularly as we deal with a rise in crime in our neighborhoods, we need to make sure our police have the resources they need to do their job safely and effectively.”
DeLuca’s proposal topped a list of priorities outlined Tuesday when the Illinois Municipal League released its 2022 legislative agenda. DeLuca also sponsored a similar measure, House Bill 315, that would require the state to restore distributive fund rates to 10% by 2025.
“Without LGDF, communities across Illinois would need to explore increases to other fees or taxes — including property taxes,” the league said.
The boost would cost the state about $1 billion a year. Rich Miller of Capitol Fax reported on the league’s agenda Tuesday and sought a response from the governor’s office, which directed him to page 52 of Pritzker’s 574-page budget proposal.
Illinois already is steering an additional $1.1 billion annually to local governments, Pritzker’s administration said in the budget. That includes an extra $200 million a year in sale taxes thanks to a court ruling on internet sales and $600 million more each year in motor fuel taxes after lawmakers approved the Rebuild Illinois program.
Local governments are getting shares of taxes on sales of recreational cannabis and expanded video gaming and will soon get a slice of new revenues from licenses for additional casinos, Pritzker’s administration said in the budget.
Regulators in December announced plans to award a license for a casino at Interstate 80 and Halsted Street. Most of the local revenue will go to Homewood and East Hazel Crest, though 42 other communities will share 3% of monthly profits.
The distributive fund budget fight might have as much to do with political muscle as its does money. Clearly, Pritzker would like to wave tax-cut messaging during his reelection campaign. Local governments and legislators are standing together to show unity and strength.
It shouldn’t be too difficult to forge a compromise agreeable to everyone by the time the budget process concludes in late May. But if I had to pick a side, I would support local government leaders and their efforts to bring home a greater share of state tax revenues to benefit their residents.