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Local municipalities seek more state tax revenue, pension changes to ease property taxes

Illinois Watchdog.Org

Wednesday, March 6, 2019  |  Article  |  By Cole Lauterbach

Local Government (60) , Pensions (70) , Revenue
Representatives of Illinois’ villages, towns and cities are confident that municipalities will be able to get more state tax money with newly installed Democratic supermajorities and a Democrat in the governor’s office.

The Illinois Municipal League announced a list of changes the group wants to usher through in Springfield. Chief among them is raising the percentage of state tax revenue municipalities get from the Local Government Distributive Fund, or LGDF, which had been reduced in recent years.

IML Executive Director Brad Cole said the group has seen support for that among Democrats in the General Assembly and think freshman Governor J.B. Pritzker also will be receptive.

“We are excited about the fact that we have a new opportunity to work with the administration,” he said. “We have a new General Assembly and they’re definitely taking a look at things.”

Illinois currently sends just over 6 percent of personal and corporate income taxes to local municipalities, totaling around $1.3 billion in personal and corporate income tax annually.

IML-backed legislation would gradually increase that figure to 10 percent by 2023.

It had been set at 10 percent for years before being lowered in 2011.

Increasing the amount of money directed to municipalities means less money for the state to spend. The state's financial picture is bleak. Lawmakers face a $3.2 billion deficit in the next budget and more than $8 billion in backlogged bills. The state's pension systems have more than $134 billion in unfunded liabilities. Pritzker's proposed budget counts on revenue from recreational marijuana and sports gambling, among other taxes and fees, to plug the gap. Lawmakers have yet to legalize recreational marijuana or sports gambling. 

Cole said the league is also working with lawmakers to pass legislation to consolidate the more than 600 local police and fire pensions across the state to save on administrative fees paid for by local residents.

“If we want real, meaningful property tax reform in this state then we have to have meaningful, real pension reform in this state,” he said.

Sixty-three percent of Illinois’ 651 downstate public safety retirement funds didn’t receive the required minimum payments from municipalities in 2016, according to a Department of Insurance report. 

As public safety pension costs have grown in recent years, municipalities have had to put more money into the funds, leaving less money for services. Cole has said the existing local pension system is "unaffordable" and "unsustainable."