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Question of the day

Wednesday, Mar 27, 2013

* Should the state keep the portion of all new income tax revenue growth that is traditionally transferred to municipalities?

Take the poll and then explain your answer in comments, please.


surveys

- Posted by Rich Miller        

43 Comments
  1. - the wonderboy - Wednesday, Mar 27, 13 @ 12:59 pm:

    Municipalities continue to generate new revenue through other taxes and fees. If we are expecting shared sacrifice, we should expect the same of all interested parties…including municipalities. And let’s be honest, the municipalities find other ways to get state funding. I can’t tell you how many times I have read a story in the last year about a state grant for a park, museum, road, etc. Not that these are bad things, but they certainly show the multiple methods for receiving state funding that exist.


  2. - anon sequitor - Wednesday, Mar 27, 13 @ 1:00 pm:

    I voted for the compromise. The munis are relatively healthy compared to the state. And if the state continues in financial freefall, it will hurt the munis even more in the future. Take a bit of pain now, versus a lot of pain when the state collapses.

    Furthermore, the muni’s overblown “the sky is falling” PR approach to this turns me off.


  3. - Angry Republican - Wednesday, Mar 27, 13 @ 1:05 pm:

    Since it is possible for municipalities to declare bankruptcy (receivership actually), but not possible for a state to do so the state should not share a penny. Let the municipalities raise fees/taxes or file for bankruptcy.


  4. - Rich Miller - Wednesday, Mar 27, 13 @ 1:10 pm:

    ===This fund just takes money from downstate and gives it to Chicago and the suburbs===

    This is income tax money. Downstaters don’t make nearly as much as they do in the Chicago region.


  5. - Anonymous - Wednesday, Mar 27, 13 @ 1:19 pm:

    I know Rich thinks this isn’t a decrease, but rather the elimination of an increase, but this money is built into long-term budgets by the locals.


  6. - TCB - Wednesday, Mar 27, 13 @ 1:20 pm:

    Yup……and as long as I see a member of my township plowing the driveway of my neighbor with a nearly new tractor following a snow storm, I will be all for local government sacrifice.


  7. - Rich Miller - Wednesday, Mar 27, 13 @ 1:20 pm:

    ===this money is built into long-term budgets by the locals.===

    Not disputing that.


  8. - TCB - Wednesday, Mar 27, 13 @ 1:22 pm:

    =I know Rich thinks this isn’t a decrease, but rather the elimination of an increase, but this money is built into long-term budgets by the locals. =

    And now it’s in Quinn’s budget……somebody’s going to have to give some ground.


  9. - Rich Miller - Wednesday, Mar 27, 13 @ 1:24 pm:

    ===And now it’s in Quinn’s budget===

    No, it isn’t. We have a relatively new state law which requires gubernatorial budget proposals be based on existing laws.


  10. - Irish - Wednesday, Mar 27, 13 @ 1:35 pm:

    I voted that the new income tax revenue growth should be kept by the state. As I understand it this is new growth so the cities will get waht they have had in the past. AND the state needs it worse than the cities.

    I am tired of knowing that the state is in a fiscal crisis and I see my town getting grants and state money for benches, gardens, tree plantings etc. The pharmacy I go to is owed thousands of dollars by the state to the point of holding back on hiring and we are planning to do street beautification projects.

    All of the fluff should be stopped until the bills are paid. I appreciate the city being frugal to the point of not being in a fiscal crisis, however they can wait a few years to plant posies until the state is on better fiscal footing.


  11. - Esquire - Wednesday, Mar 27, 13 @ 1:36 pm:

    Given the present situation, my preference is for the additional money being used to pay the debts of the state government.


  12. - Downstater - Wednesday, Mar 27, 13 @ 1:36 pm:

    Take it away from the locals. There is lots of waste from the grants received from the State.


  13. - Rich Miller - Wednesday, Mar 27, 13 @ 1:40 pm:

    To the person I keep deleting: I’ve notified your wireless carrier about your comments. Commenting further will just hasten your online demise. I wouldn’t do it anymore if I were you.


  14. - Ahoy! - Wednesday, Mar 27, 13 @ 1:42 pm:

    I voted no but could change my mind if the State offered mandate relief or some other kind of savings for the local governments (workers comp reform?) Otherwise, we’re just solving one budget problem by creating another and while it might be good for the State government, it’s not necessarily good for Illinois.


  15. - Wondering - Wednesday, Mar 27, 13 @ 1:55 pm:

    I voted NO and I am with Ahoy!

    Take the money but then stop with the unfunded mandates and, God yes, some real work comp reform would be nice.

    And if State grants for benches, beautification and other non-essential “stuff” is the issue then cut that crud out as well.


  16. - Bluefish - Wednesday, Mar 27, 13 @ 1:57 pm:

    Municipal LGDF has not returned to pre-recession levels. This would prevent them from ever fully recovering. Plus͵ as Rich pointed out this is income tax revenue so it is a quiet form of income redistribution. The poorer municipalities would suffer the worst effects of this move.


  17. - Michelle Flaherty - Wednesday, Mar 27, 13 @ 2:00 pm:

    It’s a state income tax. In the current deal, the locals get the money but none of the political blame. Let’s do what Indiana did, the state keeps the state tax money and gives the locals the ability to levy their own tax. If they want the money, they can make the case to their taxpayers.


  18. - Darienite - Wednesday, Mar 27, 13 @ 2:00 pm:

    Voted for splitting the tax increase. Local agencies are upset when the State imposes new laws or regulations on them and then expects the township or village to pay for the added expense without assistance from the State. Giving them a share would at least acknowledge the financial burden imposed upon the LAs.


  19. - Sarge - Wednesday, Mar 27, 13 @ 2:00 pm:

    Ahoy! makes an excellent point about what being good for the State not necessarily being good for Illinois. The State keeping all of the increase for itself is not “shared sacrifice.” It’s the State getting more and local governments getting less. Where’s the sacrifice on the State’s side of that equation? Yes, there are other State and federal grants available for locals, but those grants don’t pay cops, firemen, and other local government employees who deliver services to local citizens. And if the State offers those grants, what are the locals are supposed to do? Say, “No, thank you, keep that money and apply it to your bills.” The State can’t get its house in order so the best solution we can come up with is to not treat the drunken sailor, but to stick more cash in his pocket? How’s that help anyone?


  20. - Anon. - Wednesday, Mar 27, 13 @ 2:07 pm:

    I voted yes, but I would go beyond that. There should be no revenue sharing between any levels of government. Taxing and spending authority should be at the same level.


  21. - 47th Ward - Wednesday, Mar 27, 13 @ 2:12 pm:

    I voted yes, if only to get the mayors on board with the cost shift idea to fund pensions. This is a different route to the same goal: getting new revenue into GRF to help the state make its increasing pension payment. If the mayors don’t want to raise property taxes themselves, maybe they could kick this over to the school boards to wrestle with.

    The solution to the pension issue is more revenue. The question is, who pays, and how much? Under this scenario, cities pay. Under the cost shift proposal, school districts pay. Pick your poison.


  22. - reflector - Wednesday, Mar 27, 13 @ 2:22 pm:

    I thought we were all part of Illinois.I could vote yes if I didn’t watch what the state does and is compounded by the GA


  23. - Skeeter - Wednesday, Mar 27, 13 @ 2:24 pm:

    Maybe I’m not clear on the concept, but this seems bizarre to me.

    The state takes money and then gives it to the municipalities.

    Why not reduce state taxes and have the municipalities pay their own way? Why do we need the middle man?


  24. - Precinct Captain - Wednesday, Mar 27, 13 @ 2:45 pm:

    I voted, “No, the locals need the revenue.” This has been built into their long-term budgets and they are counting on this revenue. However, I’m not tied to the state keeping an income tax revenue sharing plan alive. I’m much more sympathetic to the position articulated by Laurel Prussing, Urbana’s mayor. Her position is that if the state wants to cut back from the income tax revenue share (whether from the growth in the share or further), then municipalities should be freed from various state mandates that are costly to towns.


  25. - Joe McCoy, IML Legislative Director - Wednesday, Mar 27, 13 @ 3:04 pm:

    In no uncertain terms, municipalities must continue to receive their full share of income tax revenue. As part of the income tax increase, cities and counties already saw the local portion of the state income tax reduced from 10% to 6% of total collections, with 100% of the new money going to the state. This money went primarily toward the state pension payment. Meanwhile, local pension costs to fund the benefit levels that are SET by the state for municipal employees only continue to increase and threaten the long-term sustainability of local budgets. The state cannot in good conscious both obligate local governments to fund benefits that have been set by the state only to turn around and take money away from these same local governments in the name of “sacrifice.” All this accomplishes is the transference of financial problems to local budgets and taxpayers without solving the structural budget problems of the state. The financial problems of the state must be solved on a permanent basis, not spread to local governments throughout Illinois. Simply moving money around to plug holes is not a coherent public policy.


  26. - Zygmuntovich - Wednesday, Mar 27, 13 @ 3:11 pm:

    I voted for the locals. I thnk they can be better trusted than the state to spend the money on their own local constituents.


  27. - LisleMike - Wednesday, Mar 27, 13 @ 3:30 pm:

    I voted split because the locals budget based upon this and pulling the rug from under them benefits no one. Sharing the pain is necessary. They will scream but we are all in the soup together. Local control means local control on all levels. split seem fair to me.


  28. - hisgirlfriday - Wednesday, Mar 27, 13 @ 3:49 pm:

    If munis want revenue to them to increase then raise taxes at the muni level. Let the state start paying its bills and only after that is addressed should cities get increased revenue from the state.


  29. - WhoKnew - Wednesday, Mar 27, 13 @ 3:56 pm:

    I voted NO!

    I saw an article about 25 years ago that said when it comes to Government entities, Local Government was 97% effective with the monies they spent. State Government was about 70% effective & Federal Government was only about about 40% effective with the TaxPayer dollars. I’d be interested to know if those percentages have changed. — I still say keep it local.


  30. - Sunshine - Wednesday, Mar 27, 13 @ 4:19 pm:

    Voted for the state to keep all the money.

    Perhaps, just perhaps, it will force the cities to be more frugal with their money and learn the meaning of the word “no” when it comes to programs that are not absolutely necessary.

    We also need to start looking at passing on federal money that covers a particular permanent program for five years then makes us responsible for the lions share from that point forward. Their generosity is killing us.


  31. - Amalia - Wednesday, Mar 27, 13 @ 4:23 pm:

    seems like this is closer to General Revenue Sharing that the Feds eliminated a long time ago, under Reagan. besides, does money currently go to Townships? the black hole of governments in most areas! I’ve driven past one township that posts signs touting their emergency radio station. in the middle of Cook County. seems like a review of who does what, at what cost is in order. State needs the money more.


  32. - One of the 35 - Wednesday, Mar 27, 13 @ 4:26 pm:

    Rich: I keep going back to the history and origin of the state income tax. The idea was that the state would set the income tax at a level higher than they really needed and share 90/10 with local government so that locals would not also implement an income tax. Then the state says: “Well times are tough, we need the money, so we will only shre the original amount of the tax and not the increases”. The the state creates a temporary 67% increase in the income tax and says: ” We are going to keep the entire increase.” Now the state will probably make the increase permanent. Don’t the taxpayers feel outraged at this horrible fiscal management by the state? all the while, local government has lived within their means. And this is the thanks they get?


  33. - Harry - Wednesday, Mar 27, 13 @ 4:41 pm:

    I voted No. If we’re going to change the financial relationship between the State and local units, let’s do it in an honest, open and above-board fashion–and the freeze IS in Quinn’s budget. The timing of that is really sweet, coming at the same time as Chicago and the Universities got downgraded by Moody’s because they depend on State funds but the State, because of its problems, is no longer to be trusted to pass through to them what they count on. Nice job, all around.


  34. - Ruby - Wednesday, Mar 27, 13 @ 5:33 pm:

    The state of Illinois is much more in need of the revenue than the municipalities and not able to declare bankruptcy. If Illinois adopts a progressive income tax structure, they can share more income tax revenue with the municipalities.


  35. - Charlie Wheeler - Wednesday, Mar 27, 13 @ 5:44 pm:

    Historical note:

    The LGDF dates back to enactment of the income tax in 1969 and was part of the political compromise between Gov. Richard B. Ogilvie and Chicago Mayor Richard J. Daley that led to significant support from Democratic legislators for the income tax legislation.

    The local share was 1/12th of income tax receipts minus refunds through FY 1994, 1/11th through FY 1995, and 1/10th thereafter (30 ILCS 115/1) until January 31, 2011. From February 1, 2011 through January 31, 2015, the local share is 6 percent of individual income tax receipts minus refunds (plus 6.86 percent of corporate income tax proceeds, minus refunds.)

    The LGDF is to be distributed monthly to municipalities and counties on a per capita basis, according to the most recent census for cities, towns and villages, and for the unincorporated areas of counties. (30 ILCS 115/2)


  36. - Ruby - Wednesday, Mar 27, 13 @ 5:45 pm:

    The state of Illinois should also keep the employee income tax revenue that is traditionally kept by corporations in Illinois. This money could be used to pay our state’s overdue bills.


  37. - John Parnell - Wednesday, Mar 27, 13 @ 6:05 pm:

    I voted for the state to keep the money. The cities and counties get mostly all of the member project money and have for years. This money frees up other money the cities were going to spend. This has been a gift for too long.


  38. - Steak Taters And Gravy - Wednesday, Mar 27, 13 @ 8:25 pm:

    @Pluto: “Next you will suggest that the municipal portion of the sales tax be forfeited as well.”

    So true. Just wait. The General Assembly and Pat Quinn’s thievery knows no bounds.


  39. - itzfay - Wednesday, Mar 27, 13 @ 10:10 pm:

    I voted no. Municipalities are not the cause of the pension problem; they must pay their portion of pensions. IMRF is well funded (relatively) through mandatory contributions from municipalities and employees. If the state had done the same, this would not be required. As has been mentioned, income tax distributions have still not stabilized due to the recession, meaning that as the economy grows, the state would receive all of this growth. As has also been mentioned, this tax sharing mechanism is most beneficial for poorer areas, making this a regressive change.


  40. - BW - Thursday, Mar 28, 13 @ 7:56 am:

    Most municipalities in the State of Illinois are not Home Rule and have their hands tied to certain caps that limit them from levying taxes. For example, the cap for Police is 0.075% so in a small town with EAV of $22 million, that would be about $17,000, which is about half a salary without benefits. Small towns depend on that money.


  41. - champaigndweller - Thursday, Mar 28, 13 @ 8:31 am:

    Yes, because the State, in the past, has passed a number of unfunded mandates directed to the municipalities; therefore, the State should provide money to the cities for those kinds of things.


  42. - champaigndweller - Thursday, Mar 28, 13 @ 8:32 am:

    Sorry–I meant the STate should not keep the money.


  43. - Sonic Infidel - Thursday, Mar 28, 13 @ 8:40 am:

    I hate to say it, but for the relatively small amount of $68 million, it’s hardly worth the political fight. That’s hardly a drop in the bucket in terms of what’s needed to get Illinois on solid financial ground again. If it were $680 million, that would make a lot more sense, but this seems like trying to repair a decapitation with a band-aid.


Sorry, comments for this post are now closed.


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