Local government officials are questioning whether the state of Illinois will make cuts to local government distributive funds, the portion of state income tax given to municipalities.
At a May 27 Citizens Club of Springfield meeting, Mayor Michael Houston told Senate President John Cullerton, the featured speaker, of his concerns that the state could hinder city services if cuts are made to the local government distributive fund.
“It’s been my position that we should continue to pay that money to the local governments,” said Cullerton. He added that he disagrees with a Senate Republican proposal to cut $300 million from the budget, partly by making cuts to the local government distributive fund.
Kelly Kraft, Gov. Pat Quinn’s office of budget and management spokesperson, says that any reductions in state income tax given to municipalities were a part of a Senate Republican proposal to reduce those funds to city governments, and not the position of Gov. Quinn. But the idea never took off, according to the governor’s staff.
“It was never an elimination, it was never a reduction,” said Kraft in an interview. “Nothing has changed for anybody. We didn’t even present the proposal.”
“That’s good, if that’s the case,” says Houston in an interview May 31. “Until they have a budget in place, I would continue to worry.”
The General Assembly sent the state budget to the governor’s desk May 30.
The governor’s office of budget and management had considered delaying payments to municipalities but never formally proposed the idea, according to Kraft. No changes have been made to those payments, according to Kraft. Quinn originally proposed cuts to local government distribution funds in his 2010 budget address, but Kraft says, it never “materialized.”
The state currently distributes 10 percent of the first 3 percent of the state’s income tax to municipalities, according to Cullerton. Houston said that state income tax revenue accounts for 9.1 to 9.3 percent of Springfield’s corporate fund of $108 million. He said any cuts could impact personnel and basic city services if reductions are made.
Houston remains concerned about a possible fiscal loss to the capital city.
“For the city of Springfield, we’ve received less money in the last fiscal year than what we received the year before in terms of the state income tax,” said Houston. Houston told Cullerton that when the state income tax was originally proposed, rather than local governments having the ability to levy their own local income tax, the state provided the vehicle for local governments to have access to income tax revenue.
Cullerton said that giving cities a portion of the state income tax is a law and can be changed. “It’s a law and we’re over there making laws and trying to balance budgets,” said Cullerton. “I don’t even know if it’s going to happen, it may be that this is one of the things we’re talking about.”
Cullerton was met by some laughter from the crowd after he added that, “Mayors of the state did not help us very much to pass the income tax (increase), so maybe that’s another reason they didn’t get much money.”
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