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Machesney Park opposes state trying to take more local revenue
By Bob Balgemann
Reporter
The village board has approved two resolutions that deal with sources of state revenue, one of them in favor of proposed action in Springfield and the other in opposition.
Resolution 37-R-21 supported restoration of local government distributive funds (LGDF), which Gov. J.B. Pritzker was proposing to further decrease by 10 percent in the state’s 2021-22 budget.
The lengthy resolution provides history on the somewhat complex issue and explains how it affects municipalities across Illinois, which provide essential services to their residents, including public safety support, transportation, storm water/waste water infrastructure, health services and many others.
The state has maintained a long-term agreement with those municipalities to support and invest in those services through the LGDF, which includes the collection and distribution of tax revenues on behalf of those municipalities.
Since the state income tax was adopted in 1969, Illinois has shared a percentage of total income, collected through the LGDF, with municipalities on a per capita basis in lieu of a local income tax.
But those shared revenues have been significantly reduced by the state since 2011, from 10 percent to the current 6.06 percent. And now the governor has proposed that the 2021-22 state budget include a further 10 percent reduction in the amount of LGDF revenue being distributed to local governments.
The resolution raised these points:
* “Municipalities depend upon LGDF dollars, which can account for between 10 and 20 percent of a municipality’s operating budget, to lessen the burden on taxpayers and reduce the reliance on property taxes …”
* “In addition to LGDF cuts over the years, the state has also reduced municipalities’ share of the personal property replacement tax and increased state sales tax collection fees, while cities and villages have had to fund skyrocketing pension costs, which account for substantial budget increases each year …
” This revenue reduction has been proposed at a time when municipalities continue to sustain losses and endure costs by the COVID-19 pandemic …”
Given all that, the resolution urges the General Assembly and governor to restore LGDF payments to the promised 10 percent rate so that municipalities may provide basic levels of service and lessen the reliance on property taxes.
The village’s administration and finance committee (A&F) considered the resolution at the May 17 and recommended approval in a 4-0 vote. That recommendation continued on to that night’s village board meeting, where it was approved unanimously as part of the consent agenda.
TIF assistance
For many years, the village has used tax increment financing (TIF) to successfully aid in the development and redevelopment of the village. “TIF has been the single most important development tool that the village has been able to use to incentivize development,” Village Administrator James Richter II told A&F on May 17.
But now, he said Senate Bill 2298 as proposed would “eliminate the effectiveness of this tool that we use to effectuate positive economic change.”
A&F was about to consider the resolution of opposition to that bill when Administrator Richter said after A&F meeting packets had gone out, SB 2298 had been withdrawn. As a result, he said a study group had been formed to take another look at the proposal.
Still, he said the committee might want to consider opposing the bill for future reference. That happened, in a 4-0 vote, with unanimous confirmation later that evening by the village board.
Machesney Park has five TIF districts, along the Illinois 173 shopping corridor; the Illinois 251/North Second Street corridor, three areas north of Route 173 and one at the intersection of Route 173 and Interstate 90.
