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The carrot and the stick

Thursday, May 8, 2014

* Let’s revisit yesterday’s Daily Herald story about how some municipal groups were contemplating whether to back an extension of the state income tax in order to possibly get a bigger piece of the revenue sharing pie or to ward off an attack by Democrats.

The story was based on a letter that DuPage Mayors and Managers Executive Director Mark Baloga wrote to his members

You likely have seen recent news reports of Governor Quinn and Legislative Leaders discussing the opportunity for local governments to secure, or even increase, the local share of state income tax (aka “LGDF”) if the current 5% income tax rate is extended beyond its current sunset date of 2015. Senate President Cullerton directly addressed this topic with DMMC members on April 9 during our Springfield Drive Down. Since that meeting, our lobbyist has been in discussions with legislators and has conveyed the following:

    1. Extension of the 5% income tax is almost certain to pass regardless of municipal support, opposition, or neutrality.
    2. If municipalities and municipal groups uniformly oppose or fail to support the legislation, then it is also a near certainty that LGDF will be eliminated or severely cut. This would be framed as cutting state expenses to help balance their budget.
    3. If municipalities and municipal groups such as DMMC support the tax rate extension, this could secure an increase in the local share of income tax and direct deposit of LGDF revenue—both long- standing DMMC legislative priorities.
    4. Support for the tax rate extension would generate ongoing political capital for DMMC, other municipal groups, and municipalities themselves.
    5. “Support” can range from a simple statement of organizational support, to individual mayors actively supporting the legislation and the legislators who vote for it, and anything between. More active support would result in even more political leverage on LGDF and other current and future issues.

After extensive discussion, the DMMC Legislative Committee (by unanimous consent, on April 25) and the DMMC Board of Directors (by a 9-4 vote, on May 1) approved DMMC’s conditional support for continuation of the 5% tax rate as long as the bill adequately increases the current 6% LGDF portion of income tax and provides for direct deposit of LGDF revenue to eliminate delays in payments to municipalities. The Board’s motion further specified using this opportunity to pursue additional legislative action including:

    A. Stoppage of HB 5485 which would require negotiation of minimum staffing for fire departments and districts.
    B. Consideration of additional legislative priorities such as expenditure authority for non-home rule hotel motel tax revenue.
    C. Ability to participate actively in development of municipal public safety pension reform legislation.

That’s all really quite fascinating. A grand bargain laid open.

* OK, now back to yesterday’s Daily Herald story

Cullerton spokeswoman Rikeesha Phelon said she couldn’t confirm the conversations between her boss and municipal leaders.

However, Phelon said Cullerton has said for months that mayors would see a smaller share of state income taxes if the rates don’t get extended.

“That’s not a threat,” she said. “That’s just math.”

In order to cut the municipal share, new legislation would have to be passed.

“This certainly sounds to me like out-and-out extortion,” said Madeleine Doubek, chief operating officer of Chicago-based Reboot Illinois, a voter-advocacy digital media group. “This just pulls back the curtain on the worst of Illinois government in action. Who, in this equation, is looking out for the taxpayers?”

* As I also told you yesterday in an update, Sen. Donne Trotter unveiled legislation yesterday designed to put heat on the mayors…

After facing years of funding cuts, Illinois’ schools could get more than $1 billion in new funding as State Senator Donne Trotter (D-Chicago) is urging his colleagues to truly make education the priority they claim it is.

Currently, mayors and village presidents get a cut of the state’s income tax with no strings attached. Trotter’s proposal ends that giveaway and instead steers the dollars – $1.45 billion in the upcoming budget year – to the state’s public schools in an effort to have the state finally live up to its education funding commitments.

* The bill had a hearing today. Trotter eventually pulled the proposal out of the record, but the SDems tweeted extensively during the debate


- Posted by Rich Miller        

  1. - Formerly Known As... - Thursday, May 8, 14 @ 11:37 am:

    == After facing years of funding cuts, Illinois’ schools could get more than $1 billion in new funding ==

    Thought the “education surcharge” was supposed to address this. Ask for 1%, get 2%, and our schools still get neglected by legislators.

    I have little trust any more that those who talk about the importance of education in Illinois really means it. Good for Trotter on this, regardless of whether it is meant as a “stick” or an ambitious plan on its own.

  2. - Captain America - Thursday, May 8, 14 @ 12:47 pm:

    Cities need to be careful before jumping on the more tax bandwagon because many of them, such as Aurora, already have massive taxes from within (property, sales, etc). When you add more income tax to the overall tax burden on the taxpayer, it becomes too expensive to live or do business.

  3. - Anon. - Thursday, May 8, 14 @ 2:07 pm:

    ==However, Phelon said Cullerton has said for months that mayors would see a smaller share of state income taxes if the rates don’t get extended.

    “That’s not a threat,” she said. “That’s just math.”==

    The bill that created the higher tax rates reduced the percentage of income tax revenues that go to the local government distributive fund so that (roughly) all of the tax increase would go to the State. As the tax rates phase down, the percentage of revenues that goes to the locals goes back up. So the locals will get a bigger percentage share of income tax revenues when the rates go back down in 2015, and should get roughly the same dollar amounts.

  4. - wordslinger - Thursday, May 8, 14 @ 6:09 pm:

    –“This certainly sounds to me like out-and-out extortion,” said Madeleine Doubek, chief operating officer of Chicago-based Reboot Illinois, a voter-advocacy digital media group.–

    Gee, Maddy, why don’t you ask the Grifs to buy you a dictionary? Then you could look up the definition of the word and see how ignorant you are.

  5. - Just The Way It Is One - Thursday, May 8, 14 @ 7:16 pm:

    The Mayors and Village Presidents, deep down, want and need this money–and they’re GONNA take the bait with the Income Tax permanent extension as a result…!

  6. - Yellow Dog Democrat - Thursday, May 8, 14 @ 7:27 pm:

    Folks, it ain’t just the income tax.

    Local share of the sales tax will eventually shrink too.

    Call it math or call it political reality, but given a choice between cutting funding for schools or state programs that the General Assembly is accountable for, or sending a check to someone else to spend where lawmakers neither have a say nor get credit….

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