Mayors, Local State Reps United Against Local Funding Cuts

Springfield has only begun budget talks for fiscal year 2011-12, but already rumors are fluttering north that greater cuts in local funding are needed to help pull the state out of the red.

Both Gov. Pat Quinn and the Illinois Senate Republican Caucus have suggested cutting $300 million—or 5 percent—from the local share of state-collected income tax, though no formal bills have been introduced.

The impact of cuts under this scenario would depend, of course, on population size. A larger community such as Palos Hills could forgo as much as $409,000, whereas Palos Park and Palos Heights stand to lose $113,000 and $293,000, respectively.

“This is money that is used by our communities to pay for critical core services such as police, fire, roads, water and sewer, and snow plowing,” Palos Hills mayor Gerald Bennett wrote recently in a , following an announcement to the city council. “Further cuts will undoubtedly undermine the safety and well-being of our communities.”

In a more extreme case, a report by the Illinois Policy Institute advocates slashing all state-collected local government income tax revenue—all $1.11 billion of it.

“This money belongs to municipalities and counties and is simply collected by the state,” wrote Joe McCoy and Jonas Harger of the Illinois Municipal League, which has been mobilizing resistance. Still, the state’s revenue-sharing formula, which determines the Local Government Distributive Fund (LGDF), has steadily decreased over the last several years.

“Local municipalities did not create, nor contribute … toward the state debt situation,” Bennett said. “We can't solve the state's fiscal problems by destroying local budgets and spreading the fiscal problem even wider.”

The Palos Park Village Council passed a resolution Monday officially opposing further reductions. Mayor John Mahoney reminded his board members that when state lawmakers established the state income tax they promised municipalities a set percentage of it. Now, he said, they’ve forgotten that commitment.

What’s more, local governments will not receive any of the recent state income tax hike, which took affect Jan. 1. It’s the equivalent of a reduction.

“I understand the problems legislators are facing … but I do reject the characterization that we’re going to share the pain, because the pain is really self-created by the legislators,” Mahoney said.

Mary O'Connor, village finance commissioner, said she heard it advanced bluntly in Springfield that lawmakers want to force municipalities to make tough cuts so they don't have to.

Bennett, who heads the Southwest Conference of Mayors, has to contact their state representatives about leaving municipal funding alone. They’ll find a sympathetic ear at the office of State Rep. William Cunningham (D-Chicago). He’s co-sponsoring legislation that would segregate municipal funds away from the regular state budget where Springfield can’t touch it.

“I think that’s one way to stop state government from sweeping those funds that are earmarked for local government,” he said. “Local governments depend on that fund, and without it they would have to increase taxes or radically cut services.”

Reforms passed late last year require local governments to make full, annual payments to police and fire pensions. If not, the state can withhold an equivalent portion of its LGDF. As Bennett and others have pointed out, this could only exacerbate the municipalities’ financial problem.

State Rep. Kelly Burke (D-Oak Lawn) said there might be room to “tweak” local funding, but she opposes any bill “eliminating or severely reducing it.”

“I think you’re just putting the pressure on a different level of government and they still need to provide all those services,” she said.

State Rep. Monique Davis (D-Chicago), who represents part of Palos Heights, could not be reached Monday for comment. Nor could Palos Heights mayor Bob Straz.

Given the backlash, Cunningham believes a bill permanently reducing local funding will not arise this year.

“I don’t think there’s anything out there right now, other than rhetoric,” he said.

The state’s fiscal year begins July 1.