Local governments have to return overpayments to state

By Bob Balgemann

REPORTER

Local governments, including those in Boone County, will have to return $168 million in overpaid corporate replacement taxes to the state Department of Revenue (DOR).

That is official now that the state legislative session has concluded with no action taken to ease or remove the burden.

State Rep. Bob Pritchard, R-Sycamore, said a bill was drafted to waive the repayments, but “it didn’t go anywhere.”

He added that the DOR “is still working on details on how the money will be repaid. The repayment will be gradual.”

Locally, Belvidere School District 100 has to dig deepest into its pockets, having been overpaid by $330,354.89 in 2013, according to a list on the DOR website.

Boone County government was overpaid by $60,926.16 and County Administrator Ken Terrinoni said previously that money would come out of the general fund.

The City of Belvidere is close behind, at $58,264.86, followed by North Boone School District 200 with $14,476.70, Belvidere Park District: $11,835.80, and Boone County Conservation District: $10,507.51.

Boone’s nine townships also were overpaid, ranging from Belvidere by $9,483.36 to Manchester: $67.21. Township road and bridge funds also received more than they should have, as well as fire protection districts.

Replacement tax is money collected by the state and then distributed to local governments to replace dollars they lost in the 1970s, when their power to impose personal property tax on corporations, partnerships, and other business entities was taken away.

Pritchard, who represents a small part of Boone County, said the overpayments were discovered during a recent tax system modernization initiative by the state.

Municipalities receive varying amounts of replacement taxes each year.

For instance, the City of Belvidere expects to receive $488,083 during the 2016-17 fiscal year, which began May 1. That compares with $427,808 in the previous year.

Meanwhile, the state has adopted a stopgap budget that will be in effect until Jan. 1, 2017. The bill provides dollars for schools, higher education, human services, capital projects, and prisons to operate until that time.

“Although this budget is only a temporary solution, this measure was critical to our state’s well being,” State Rep. Joe Sosnowski, R-Rockford, said.

“For the first time in seven years, K-12 education will be fully funded at the general state aid rate,” he said.

In all, school districts were provided with $361 million in additional dollars.

However, the Boone County legislator cautioned, “I know we are not out of the woods yet; it is the legislature’s responsibility to finish the job and pass a balanced budget. In addition, provide property tax relief to revive our housing and local business economies. To do this, the legislature will have to come together and make compromises.”

Rep. Pritchard said the stopgap financial plan “is not ideal, but it was the only way to keep most state programs functioning. We need a full year budget that is balanced. But that goal, according to the [House] Speaker [Democrat Michael Madigan] will not happen until after the [Nov. 8] election.”

He agreed with Rep. Sosnowski that a final budget agreement “is going to require a willingness to compromise on revenue, spending reductions, and reforms.”