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current economic recession and barring no changed in the fund formula, these state income tax appropriations would decrease by 3 percent. If this legislation passes and local governments lose another 8 percent, it will be devastating.”
LGD fund revenues are allocated to municipalities on a per-capita basis, according to Frang. He says in FY 2009, the state income tax share to local governments is estimated at $94.90 per person, but that is the bill passes and the state of Illinois keeps the full 8 percent, that per-capita allotment amount would drop to $85.
Southwestern Illinois municipalities and counties are voicing their objections to the bill, saying crippling local government isn’t the answer to solving the state’s financial crisis.
Walter Denton, city administrator for the city of O’Fallon, says the city could lose more than $200,000 in state tax revenues if the bill becomes law.
“Some 17 percent of our budget comes from the state,” said Denton. “It’s a pretty large chunk, second only to the 49 percent which comes from local sales tax. But we’re hurting right now in terms of local sales tax dollars, because a good portion of those come from the car dealerships.”
Denton says that even without the potential 8 percent cut in state income tax appropriations, O’Fallon is already projecting a $500,000 shortfall in local sales tax revenues.
“We’ve never heard of anybody trying to hold back the per-capita dollars that have been allocated to local government for years,” he said. “We’re hoping this bill doesn’t gain any traction because as a city we’re already hurting. We’ve already laid off one employee and we have a hiring freeze on seven open positions.”
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Jonathan Ferry, economic development director for the city of Granite City, says roughly 20 percent of Granite’s budget comes from the state. “We’re already projecting an 8 percent cut in our motor fuels tax for this year,” he said. “In addition to that, our Community Development Block Grant funds have gradually been decreasing over the past eight years. We used to receive $950,000 a year, and now we’re down to $650,000.”
About 24 percent of Granite City’s budget is funded by the Local Government Distributive Fund, Ferry says. If the full 8 percent of state income tax dollars was held back from the city, Granite would lose over $300,000.
Other Southwestern Illinois cities with similar populations are facing major shortfalls if SB 2083 passes (it’s currently in committee). Belleville, as the largest city in the Metro East, could lose just over $450,000; Alton would lose $297,000; Collinsville and Edwardsville could each lose $248,000, and East St. Louis is facing a potential loss of $287,000.
Alan Dunstan, chairman of the Madison County Board, says counties would also be victims of this legislation.
“Of course it would affect us,” Dunstan said. “Like local units of government, our county revenues are down, too, and our expenses are increasing. Look at our probation office. Last fiscal year, I was paying a little under $1 million to that office. Today I’m paying $2.8 million. We’re better off than most counties in the bi-state region because we operate nearly debt free. I just heard that St. Charles County laid off 24 people. All of us are facing difficult times.”
Frang says he sympathizes with the state and its financial crisis, but he disagrees with the strategy of depriving local government from dollars it has relied on for years.
“The state of Illinois cannot balance its budget on the backs of municipal governments,” he said.
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