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*** UPDATED x1 *** Locals furious about budget plans

Friday, Mar 8, 2013

*** UPDATE *** The Municipal League has updated with correct numbers

The Governor’s Office is proposing to cap LGDF revenue distributions using State Fiscal Year 2012 as the base year. In other words, cities and counties would not receive any LGDF revenue growth above and beyond what was received in State Fiscal Year 2012. This is absolutely unacceptable!

There is very real discussion among legislators regarding capping LGDF revenue. The IML has had several conversations with legislators who share this view of putting LGDF revenue on the table. The prospect of having to cut spending priorities, such as education, has created a renewed sense of desperation for revenue. THEY WANT OUR MONEY!

The IML received advance notice that the Governor was looking at reducing LGDF revenue by $240 million. Using this number, we estimated that the financial impact would be $18.70 per resident. As it turns out, the $240 million included transfers from approximately 80 funds, including LGDF. The $18.70 estimate based upon that number is therefore too high.

We believe, however, that the Governor’s Office of Management and Budget (OMB) is vastly underestimating the financial impact of the proposed LGDF cap and that our revised estimate is more accurate. The OMB believes that cities and counties would “only” lose $68 million, or $5.30 per resident. Using data from the Illinois Department of Revenue and our own financial projections, we believe that the revenue loss would be approximately $148 million, or $11.50 per resident. Keep in mind that this only reflects the “cap” proposals. Other proposals may surface.

Again, this is absolutely unacceptable.

Local government revenues are further endangered each year that the underlying causes of the State’s financial crisis go unresolved. Legislators and the Governor are chafing at having to make spending cuts to critical priorities like education. This places LGDF at great risk.

We are barely into the first act of what will likely prove to be a long play. We urge our members to consistently remind legislators and the Governor that taking LGDF revenue will not solve the state’s financial problem, but will only create tremendous financial problems for hundreds of local governments throughout Illinois.

They also have a video.

[ *** End Of Update *** ]

* The Illinois Municipal League fired up the mayors with a Facebook post this week

It’s on! The IML has learned that the Governor’s Office is proposing to reduce LGDF (state-shared income tax) revenue by $240 million. We have also learned that some legislators are supporting the use of LGDF revenue to address the state’s fiscal woes. To calculate the financial impact to each community, multiply the municipal population by $18.70. The IML STRONGLY urges that our members contact their legislators IMMEDIATELY in opposition to this proposed local revenue reduction. The IML will provide additional information as events develop.

Unfortunately, that’s not true. The $240 million is the total number of all automatic transfers that are being looked at by the governors. Local governments’ share of that is much smaller.

* Whatever the amount, the issue has mayors up in arms

“It’s a classic example of the legislature not being able to take care of their own house and now looking to the cities who have been responsible with their money,” said Normal Mayor Chris Koos.

“This would just compound our own pension issues,” said Lincoln Mayor Keith Snyder.

“Just because the state of Illinois is going down the tubes doesn’t mean he’s got to take the cities down with him,” Marion Mayor Bob Butler said.

Downstate lawmakers say the proposal has mayors throughout the state stomping mad.

* In other budget-related news, Chicago Democrats have for months pushed a plan to shift a half a percentage point of employer pension costs to local school districts a year over a period of several years. The districts have resisted, and their allies in the General Assembly claim the cost shift would lead to property tax hikes.

But the GA cut education funding last year by $210 million, the second straight year of cuts. And the governor has proposed a $278 million cut this year, which amounts to three percent. One reason for the cuts is that state pension costs have zoomed ever higher. From the governor’s budget address

Without pension reform, within two years, Illinois will be spending more on public pensions than on education.

* The reaction from schools has been predictably intense

Roger Eddy, a former state lawmaker and school superintendent who now heads the Illinois Association of School Boards, said he’s not sure whether some districts will be able to collect enough local dollars to make up for the loss of state money.

In addition, under a law aimed at capping property taxes, school districts have limits on what they can raise from local taxpayers.

“It’s going to devastate school districts,” Eddy said of Quinn’s proposal.

Bill Farley, assistant superintendent for business operations for Wheaton-based Community Unit School District 200 in DuPage County, said that at some point the cuts have to stop.

“The state continues to whittle away at funding, which was lacking from the start, and it puts more and more pressure on the local community to pay for the education of our students,” he said.

* And

Sycamore School District 427, already considering eliminating seven positions in part because of lack of state funding, could be out of close to $1 million in general state aid under Quinn’s plan, Glowiak said. Even more funding would be lost with transportation funding expected to be prorated at 19 percent.

“We seem to want to find scapegoats to beat up and the governor and a couple legislative leaders are making the scapegoat the pensions and schools and that’s disappointing,” Glowiak said.

The cut to transportation funding was the main concern for most local school officials, including James Briscoe, superintendent of DeKalb School District 428.

The district lost $300,000 in transportation funding this year, which contributed to a $2.3 million deficit, and is expected to lose even more this coming school year, Briscoe said. The steep cut to transportation almost assuredly means another deficit budget for the district, he said.

* Related…

* Franklin Hospital CEO: State owed $1.3M at end of ’12

* U. of Illinois looks to rely less on state support

* Officials still have hope for Dwight prison

* Quinn’s Bad-News Budget, With Deep Education Cuts, Has Justice Silver Lining

- Posted by Rich Miller        


27 Comments
  1. - Small Town Liberal - Friday, Mar 8, 13 @ 1:18 pm:

    The latest installment of the “cut somewhere else” saga.

    Now I’m sure this doesn’t describe all local governments, but in my hometown the public works department functions basically as an employment agency for the aldermen’s kids and friends. They’ve also been known to pave peoples’ driveways and do various other odd jobs unrelated to public property.

    I have no doubt they could stand a haircut.


  2. - Just Me - Friday, Mar 8, 13 @ 1:22 pm:

    I’m okay with this change, but only if local governments are included in some much-needed pension reform.

    But, this is a Quinn idea, which basically means it is guaranteed not to happen.


  3. - Endangered Moderate Species - Friday, Mar 8, 13 @ 1:33 pm:

    Representative democracy is not having its finest hour.


  4. - Joe M - Friday, Mar 8, 13 @ 1:42 pm:

    The Illinois Constitution says that “The State has the primary responsibility for financing the system of public education.”

    But I think Illinois is about last among the states in per pupil education spending - with a great deal of the funding coming from local property taxes. Illinois seems to want to fund public education even less - either though budget cuts to pay for pensions - and/or shifting pension costs to the school districts.
    ______
    SECTION 1. GOAL - FREE SCHOOLS
    A fundamental goal of the People of the State is the educational development of all persons to the limits of their capacities.
    The State shall provide for an efficient system of high quality public educational institutions and services. Education in public schools through the secondary level shall
    be free. There may be such other free education as the General Assembly provides by law.
    “The State has the primary responsibility for financing the system of public education.”
    (Source: Illinois Constitution.)


  5. - nobody - Friday, Mar 8, 13 @ 1:45 pm:

    The real solutions are painful and therefore will not see the light of day. If they allowed a secret ballot in the General Assembly, the revenue and pension problems would be solved. They know what needs to be done but do not have the courage to do it since their most important priority is to be re-elected rather than to do what is best for ALL of the people of Illinois.


  6. - anon - Friday, Mar 8, 13 @ 1:48 pm:

    Somebody needs to start calling out these school adminstrator groups. The State’ new actuary, Auditor General Holland, just produced a report assuming teacher raises of 6% a year for as far as the eye can see. The “cost shift” will force school boards to negotiate both wages and pensions. The cost shift will cost school districts zip because it will just mean smaller wage increases. Roger Eddy of all people should no better.


  7. - Captain Illini - Friday, Mar 8, 13 @ 2:03 pm:

    Speaking of administration requirements, looking into my own school district taught me a lesson in why we needed so many adminstrators in the first place. The regulations imposed that do not teach one student anything have helped to create part of this mess, and those too should be looked at holistically in line with wages, et.al.


  8. - Cassiopeia - Friday, Mar 8, 13 @ 2:03 pm:

    Given the exceptionally high salaries being paid to local school administrators I have little sympathy for the financial plight of local school districts. They have created an unsustainable situation for themselves.

    The state needs to take care of its responsibilities and local communities need to take care of their responsibilities. If property or local sales taxes have to go then so be it.

    As Madigan puts it “the free lunch should end”.


  9. - Foxfire - Friday, Mar 8, 13 @ 2:27 pm:

    Does anyone have a breakdown of the $240MM figure? From what I saw on the video of the press briefing, and the materials provided later, the Governor and his staff are being evasive about these “transfers out” and actually who would be impacted.

    In any event, eliminating the transfers out seems like a tough sell unless there’s something of equal or greater value being provided in exchange (local pension reform).


  10. - Anyone Remember? - Friday, Mar 8, 13 @ 2:29 pm:

    anon 1:48 and Cassiopeia

    Chicago still “gets” pension money, they just use it for something else - see Eric Zorn

    http://blogs.chicagotribune.com/news_columnists_ezorn/2012/07/pension.html

    IF we’re going to be fair, that amount should be taken from CPS.


  11. - nobody - Friday, Mar 8, 13 @ 2:30 pm:

    For all of you administrator haters out there, try to be specific instead of generalizing based on your very limited knowledge of salaries and other benefits paid. To use only your district information and then try to generalize it to the whole state shows a very small mind indeed. What is a high salary and what percentage of administrators are paid this high salary. That type of argument is counter productive and makes me weary.


  12. - 47th Ward - Friday, Mar 8, 13 @ 2:30 pm:

    A wise legislator once told me: there is no methadone program for those addicted to state revenue.

    The locals are starting to feel the withdrawl pains and the cuts have only been announced. If they kick in, expect the jonesing to begin in earnest.

    On the other hand, Madigan told Tichenor that he thought the locals would be OK. So there you go.

    Rich, there was a lot of good tidbits in that interview. I hope you’ll go back and lift more nuggets from it.


  13. - Just Observing - Friday, Mar 8, 13 @ 2:36 pm:

    So the Mayors recognize the state is in a fiscal mess, but they are unwilling to share in the sacrifice. Local and state funding is all interrelated.


  14. - Shemp - Friday, Mar 8, 13 @ 2:49 pm:

    The locals are upset because a) local revenues rise and fall with the state’s, so when the state revenues drop, locals drop. b) Locals are also subject to onerous pensions for police and fire, but the State controls the benefits, so they are out of locals control. The GA isn’t even talking about police and fire pensions in all the reform talk. c) when the income tax rose 2 percentage points, the state changed the formula so that the locals didn’t get any of it.


  15. - LincolnLounger - Friday, Mar 8, 13 @ 2:51 pm:

    My hometown is 4500 people, central IL, middle class, rural. The “Transportation Director” (head bus driver) makes $80K. The “Service Director” makes $79K. The husband and wife janitor team at the high school pull in 100K between the both of them. I don’t know what happens to common sense people when they get on school boards. I suspect the Superintendent runs amok, but it is curious.


  16. - Dr. Rosen Rosen - Friday, Mar 8, 13 @ 2:52 pm:

    If the Illinois Policy Institute wants to open contracts, maybe they should start with Superintendent contracts. For instance, the Superintendent of Plainfield Dist. 202, whose spokesperson was described the impact on the classroom in this story, had a total compensation package in 2010 of $294,744, $320,373 in 2011, and $334,453 in 2012. This does not include retirement enhancements. I’m guessing the teachers did not enjoy similar increases. ISBHE has a good website which details administrative salaries and benefits. http://www.isbe.state.il.us/research/htmls/salary_report.htm


  17. - Amalia - Friday, Mar 8, 13 @ 2:56 pm:

    can anyone give a more definitive answer on this IML claim? and does the plan apply to Chicago as well as other municipalities? or does Chicago get a pass, hence why other Mayors might be upset. Any clarity on LGDF matter is appreciated.


  18. - Anyone Remember? - Friday, Mar 8, 13 @ 3:08 pm:

    LincolnLounger -

    Is there no “citizen revolt” against this in your district?


  19. - Small Town Liberal - Friday, Mar 8, 13 @ 3:14 pm:

    Wasn’t there recently a scandal at the IML involving mismanagement and nepotism? And they’re going to lecture others about getting their house in order?


  20. - M O'Malley - Friday, Mar 8, 13 @ 3:23 pm:

    Hey Noboby,
    The one district HS my sibling teaches at, the total compensation for the top 2 administrators is $450k. And they just laid off teachers. When you make more than the Governor, that’s a high salary.
    And for all those that are interested, I’ve been told all Illinois school districts must post their salary info on their website. Takes a little digging, but I found it on the sites I looked up.


  21. - Charlie Wheeler - Friday, Mar 8, 13 @ 3:34 pm:

    Points of information:

    – State income tax revenue sharing

    The PDF file of the governor’s proposed FY 2014 operating budget
    “http://www2.illinois.gov/gov/budget/Documents/Budget%20Book/FY%202014/FY2014IllinoisOperatingBudgetBook.pdf”
    contains on page 84 (Chapter 2-62) “Table I-D - General Funds Transfers Out by Fund” which lays out the governor’s plans for those items.

    The table includes the following information for the Local Government Distributive Fund, all amounts in $ 000’s:

    Actual FY 2011 Actual FY 2012
    1,012,975 1,095,287

    Estimated FY 2013 Projected FY 2014
    1,122,162 1,095,287

    Because the money in the LGDF is distributed on a per capita basis, Chicago would sustain a proportionate reduction, if the GA were to cut the LGDF allocation to the 2012 level.

    – “The State has the primary responsibility for financing the system of public education.”

    In a 1973 case, Blase v. State, 55 Ill. 2d 94, 302 N.E.2d 46, the Illinois Supreme Court in essence held that the “primary responsibility” language was hortatory, “intended only to express a goal or objective, and not to state a specific command.” Later cases make clear the justices’ view that the state’s education funding structure is a subject for the Legislature, not the courts, to resolve.

    Respectfully,

    Charlie Wheeler


  22. - Arthur Andersen - Friday, Mar 8, 13 @ 3:38 pm:

    I am no apologist for high school administrator salaries, or God forbid, Roger Eddy’s, but I do object to knee jerk rhetoric like “paid more than the Governor=too much.”
    Benchmark the salaries against comparable positions, not that of an elected official whose salary is more or less set arbitrarily.


  23. - Arthur Andersen - Friday, Mar 8, 13 @ 3:43 pm:

    Oh, and one more thing-guys like that Glowiak quoted in that article are glorified bookkeepers who are waay overpaid.


  24. - Just The Way It Is One - Friday, Mar 8, 13 @ 4:00 pm:

    Hey, if the Local Municipal Leaders have incredibly better ideas about how Illinois can BETter get out of this Fiscal Mess we’re in, let’s hear them. The days of Assumed Freebies is coming to an end and everybody needs to join in the sacrifices–they’re always free to consider raising local fees on a variety of services they’ve been able to keep down for eons thanks to the State bailing them out, or raise local sales or property taxes…maybe it’s high time some of these towns figure out how to actually tighten their belts the hard way, the way our State Govt. is having to, and that being a locally elected Official can sometimes prove a lot harder in actually figuring out better how to raise funds for your own services than being always just being able to tout how you’re the Mayor or Trustee or Commissioner and feel/look important to the local residents while knowing you are TOtally relying on “Big Bro.” Illinois to always bail you out each year so you can keep looking good while somebody else behind the Scenes has ACtually been doing most of the heavy lifting!


  25. - M O'Malley - Friday, Mar 8, 13 @ 4:08 pm:

    AA. I stand by my comment that any administrator who makes more than the Governor has a ‘high’ salary in response to the post by ‘Nobody’.


  26. - Property owner - Friday, Mar 8, 13 @ 4:25 pm:

    “I think Illinois is about last among the states in per pupil education spending - with a great deal of the funding coming from local property taxes.”

    The most current national information from the U.S. Census Bureau for every school system in the U.S. is for the 2009-2010 school year. According to table 11 in the publication “Public Education Finances”, Illinois ranks 16th of the 50 states with average total spending of $11,634 per student. For spending on instruction only, Illinois ranks 20th of the 50 states with average instructional spending of $6,920. By both measures Illinois spends well above the average for the U.S. and more than a majority of the states.

    What some people point to is that Illinois spends more local funds, mainly property tax revenue, than State revenue from income, sales, and other forms of statewide taxes. If you rank Illinois using only State taxes then it is ranked 40th of the 50 states. All of these forms of tax revenue come from the same source, the tax payer.


  27. - Juvenal - Saturday, Mar 9, 13 @ 10:23 pm:

    Always great to hear from Charlie Wheeler!

    Any analysis Charlie? Here’s my take.

    I’ve never been a big fan of the Local Government Distributive Fund, which is really just a backdoor way of passing along the costs of local government to the state.

    People want to know why state taxes are so high? Well, we give local governments over $1 BILLION a year without ever asking them how they’re going to spend it.

    And that, really, is why they’r probably most upset. Most money comes with some sort of strings attached, specifying what it can or can’t be spent on. But these are unrestricted funds, soft money, the kinda cash that you can spend on stuff that no one else will pay for.

    And THAT is why it hurts so much.


Sorry, comments for this post are now closed.


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