Local Tax Share Goes Untouched in State Budget

Local government officials across the state celebrated victory Tuesday as the Illinois General Assembly adjourned with a budget that leaves municipalities' income tax share intact.

But cities and villages aren't out of the woods yet.

Bolingbrook Mayor Roger Claar said he still expects the state to take up the measure at some point.

"I'll be disappointed if they do," he said.

Gov. Pat Quinn, who has not yet signed the , had floated the idea of the state normally distributed to municipalities through the Local Government Distributive Fund. The plan would have been enacted to allow the state to pay back $4.5 billion in debt, he said.

The proposal was met with disbelief and hostility at the local level, with organizations like the Metropolitan Mayors Caucus and theSouthwest Conference of Mayors speaking out on the detrimental impact it would have on local governments.

Prior to the 66-percent income tax increase adopted in January, municipalities received 10 percent of the state's income tax revenue. However, the local share was decreased to about 6 percent following the tax increase, according to the Illinois Municipal League.

Based on projections for fiscal year 2012, governments are expected to receive an estimated $73 per resident — down nearly $20 from what was received prior to the 2008 recession.

Claar said that would have meant more cuts to the village's already balanced budget.

"For years, we have gotten 10 percent of the tax, which was distributed on a per capita basis and they are considering taking a portion of that away from us," Bolingbrook Mayor Roger Claar said. "If that happens, we'll have to go back and review the budget and make some cuts."

Although the new budget includes municipalities' share of the tax revenue, the problem of late payments from the state is not expected to disappear. In fact, it may get worse.

According to an Illinois Statehouse News story, the 2012 budget (which takes effect July 1) was balanced by delaying the payment of billions in unpaid bills. .

Whatever the speed of the payments, the Illinois Municipal League is calling it a win.

“This is a major victory for cities and counties who fought diligently to preserve their portion of the income tax,” the League wrote in a post to their website Wednesday. “The IML staff thank all of you wholeheartedly for your perseverance to send the message to legislators and the governor.”