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More buried budget details

Friday, Jul 14, 2017

* We’ve talked a little about this before, but here’s Greg Hinz

Democrats may have provided most of the votes to override Gov. Bruce Rauner’s veto of the state’s new budget and income tax hike, but the Dems in the process picked up an idea that GOP fiscal conservatives have been pushing for years: reduced money for municipalities and other local governments.

My reference is to a little-noticed provision in the budget implementation bill, or BIMP, that imposes a 2 percent “collection fee” on sales taxes gathered for the locals by the Illinois Department of Revenue.

The handling charge will apply to sales taxes levied by local governments, including not only obvious targets such the city, Cook County, Schaumburg, Evanston, et al., but also the Regional Transportation Authority and levies by the Metropolitan Pier & Exposition Authority on automobile rentals and hotels, according to an analysis by the Illinois Municipal League.

The levy will not apply to the 1.25 percent local share of the state’s mandatory 6.25 percent sales tax, only to additional levies beyond that figure that are imposed by local governments. But it’s still an estimated $60 million-a-year hit, says the league, which is not at all happy about the loss.

This idea was first floated by the governor’s office.

- Posted by Rich Miller        

12 Comments
  1. - Anon221 - Friday, Jul 14, 17 @ 10:02 am:

    Rich’s last sentence needs to be pounded home. Not as a footnote, but either in the lede or the first paragraph. Otherwise the IPIes will spin on their Tilt-a-Whirls all day long.


  2. - Oswego Willy - Friday, Jul 14, 17 @ 10:06 am:

    It’s a good thing Rauner vetoed the whole budget so an idea his office had needed to be part of an override to make it possible.

    The governor’s office’s own idea… Rauner vetoed that.


  3. - Norseman - Friday, Jul 14, 17 @ 10:08 am:

    Part of Rauner’s plan to bankrupt cities. Cut their state revenue and then freeze their ability to adjust by increasing property taxes. (semi-snark)


  4. - Interim Retiree - Friday, Jul 14, 17 @ 10:09 am:

    I am pretty sure this is done already for the school sales tax in those counties that have passed it. Makes sense if the IDR has to do extra work…


  5. - Empirestate - Friday, Jul 14, 17 @ 10:09 am:

    Just out of curiosity, how much would it cost the locals if they had to do all the collection, administration, allocation auditing, etc… themselves? Also, this is not a new idea and it predates this Governor’s office. IDOR has collected a 2 percent administrative fee for years on many of the taxes they administer for units of local government just to make up for their administrative costs. In many cases the fees do not cover the full costs incurred by IDOR for performing this service.


  6. - lake county democrat - Friday, Jul 14, 17 @ 10:09 am:

    The drip-drip-drip of tax hikes favors Republicans. The more local governments have to raise taxes, the more taxpayers say “Enough - I can’t take it anymore!” and start to look at who to blame. I don’t know if there’s enough advertising or “messaging” to overcome ingrained perceptions. When CPS says “the state isn’t funding us enough” people think “why is the state funding CPS? Let “C” fund CPS.”


  7. - My button is broke... - Friday, Jul 14, 17 @ 10:48 am:

    Pretty soon IDOR is going to make a profit just collecting taxes for the locals.


  8. - regnaD kciN - Friday, Jul 14, 17 @ 11:01 am:

    The language was originally in Senate Bill 1285 which passed out of the Senate 49-0.


  9. - Empirestate - Friday, Jul 14, 17 @ 11:04 am:

    “Pretty soon IDOR is going to make a profit just collecting taxes for the locals.”

    Based on the amount of direct and indirect services and infrastructure IDOR provides the money does not make the department a “profit” and never will.

    But maybe you are advocating that the locals just collect and administer all these taxes themselves? I’m sure IDOR would be fine with that as it would save the Department a lot more than they get in a 2 percent fee. I wonder what the IML would think of that proposal?


  10. - blue dog dem - Friday, Jul 14, 17 @ 12:10 pm:

    LGDF should have been slashed 50% instead of the paltry 10%. The entire state needs to suffer the consequences of decades of mismanagement.


  11. - Chicago 20 - Friday, Jul 14, 17 @ 1:37 pm:

    The MPEA, where Bruce Rauner was a board member and then head of the Chicago Convention and Tourism Bureau aka Choose Chicago, takes yet another hit with this agreement.

    The MPEA long term debt stated as of June 30, 2016 on the MPEA FY 2016 Audited Financial Statement climbed to $4,069,780,000 from $3,870,460,000 on June 30, 2015.
    $3.7 billion plus the increased credit line authorized of $293 million is a $3.993 billion credit line maximum.
    The MPEA Audited Financial Statement the MPEA has already exceeded the new bonding authority without selling ANY additional bonds.

    So now the MPEA can’t borrow any more money.

    The total MPEA debt with interest was $11.297 billion as of the end of FY 2016.

    In FY 2016, Interest and amortization expenses exceeded MPEA tax revenue by $64,075,000 and the MPEA deficit climbed to $1.582 billion, now the State of Illinois is going to skim 2% of the MPEA tax revenue that is already short over $64 million a year.

    The repayment of MPEA Long Term Debt now extends another 11 years further out to FY2053 from FY2042.

    The MPEA repayment schedule is ramped, a Jim Reilly hallmark with yearly payments doubling in the next ten years an increasing to 133.09% over the term of the debt so the MPEA tax revenue will also need to increase exponentially but the MPEA has no positive changes in revenue pending.

    MPEA Operating Revenues show a 10.34% drop in Exhibition Facilities revenue from FY 2015 and a 49.51% decline from FY 2009, immediately before the “reforms” which have cut the workers pay while exhibitor pricing has increased over 300%.

    McCormick Place has lost 14 shows since the “reforms” that was supposed to bring shows to McCormick Place.
    The legislation also provided $15 million in “incentives” to bribe show managers that is now also going away.

    In the past the MPEA could always count on that cash cow Navy Pier for much needed revenue but the MPEA leased that out for $1.

    Ultimately it will be the State of Illinois who will be on the hook when this house of cards comes crashing down.

    Don’t forget to look surprised when they come to you with their hats in their hands looking for billions of your tax dollars to bailout this criminally conceived reform plan.


  12. - SAP - Friday, Jul 14, 17 @ 2:11 pm:

    Retailers only get 1.75% of the sales taxes they collect and the Department of Revenue often looks to slash that, but then they get 2% for themselves. Slick


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