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* Speaker Madigan more than just implied on Saturday that he’s open to big cuts to local government funding…
Democratic House Speaker Michael Madigan said [Saturday] that he isn’t ruling out the possibility of cutting Chicago and other cities’ share of income taxes as part of a state budget plan. […]
The Tribune disclosed Quinn’s office was looking at suspending the nearly $100 million a month in payments the state makes to cities across Illinois in an effort to pressure reluctant lawmakers to support a borrowing plan to pay some long overdue bills.
“I’ve committed to Gov. Quinn that I’m going to work with the governor in terms of adopting a balanced budget and so my commitment is to work with the governor,” Madigan said.
“In the majority of states across the nation it has happened where local governments have been called upon to sacrifice also,” he said. “So it’s not out of line to ask local governments to share the sacrifice. So that’s why I would say my plan is to work with the governor.”
* The Question: Should the state significantly cut funding (let’s say, at least a third) to local governments to help balance the budget? Take the poll and the explain your answer in comments.
posted by Rich Miller
Monday, May 2, 11 @ 11:39 am
Sorry, comments are closed at this time.
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Shared sacrifice, no sacred cows, etc. Everything in the budget except interest and pensions needs to take a hair cut. It will likely fall to the property taxpayers to make up this shortfall, compounded by state cuts to education which also will fall to property taxpayers. Then there is Chicago’s budget nightmare, which may also end up costing property taxpayers. On it goes until the economy recovers and unemployment is closer to 5%.
It’s just a shift in who pays for what. There is no free lunch. Cities need to tighten their belts another notch, just like the state does.
Comment by 47th Ward Monday, May 2, 11 @ 11:46 am
Seems logical- everyone has to get by on less. My department included, so why not local governments too?
Comment by Roadiepig Monday, May 2, 11 @ 11:47 am
Cut everywhere except earned pensions. Pay the bills and live within means.
Comment by Liberty_First Monday, May 2, 11 @ 11:50 am
What difference will it actually in make in the long run? The tax payer still pays. Springfield keeps the money and passes a series of tough decisions to local government who then raise local tax rates or cut services. Same process the state is going through. Problems will come in rural areas with lesser population or poorer areas where there simply is not enough money. Waukegan / Oakbrook will barely notice. Pontiac / Neoga will have serious issues. Just another way to pass the potato or kick the can issues and shrug off responsibility.
Comment by zatoichi Monday, May 2, 11 @ 12:02 pm
This will just force the local governments to raise taxes. So it’s raising taxes by Quinn and madigan while forcing the local politicians to wear the jacket.
Comment by Fed up Monday, May 2, 11 @ 12:10 pm
I say sure. But like the comments mention, we, the taxpayers, all pay one way or another. Just more political talk locally if this happens.
I don’t know how we got where we are, but certainly the leaders at the Statehouse are partially to blame and it’s unfortunate better solutions aren’t (and haven’t been in the past) being explored. Not that I have the answer…I just don’t like what’s being put out.
They caught and killed the problem plaguing us for 10 years. Maybe people will come out and spend more money now…no, they won’t.
Comment by PaGo Monday, May 2, 11 @ 12:12 pm
I’d be interested in knowing whether this funding of “local government” is a net transfer of tax dollars from upstate to downstate or vice versa. As a Chicago resident, I’m not particularly interested in subsidizing rural and semi-rural lifestyles.
Comment by lincoln's beard Monday, May 2, 11 @ 12:13 pm
Everyone shares the pain.
And I don’t see this as “passing the potato…”
The State of Illinois shirked its responsibility long ago, and both political parties did it equally. Now both parties have to offer solutions that solve the problem at hand, no matter how painful.
Local governments, schools, townships, counties, and the other taxing bodies (regardless of geography or political affiliation) have been spending like drunken sailors. Schools especially!
Now that the bill is due, the State of Illinois is at least proposing a solution to the States’ problem. If there is a perceived ‘negative’ impact to local municipals, it really says to me,
“We have had this extra money for years, so we spent it.” Now that it may no longer be available, then those of us with ‘local control’ must decide what services we really do want to pay for, because now we really have to pay for it with ‘locally controlled dollars”.
Comment by northernwatersports Monday, May 2, 11 @ 12:15 pm
The state would still be running a deficit even if they were to withhold transfer payments, and still face a revenue shortfall. If the cease the transfer payments, the amount of money taken by the state and then transferred should be offset by a series of income tax and other fee decreases to ameliorate the loss of state revenue.
This provision does nothing to address the state budget shortfall, it is only an attempt to hold legislators hostage to whatever hair-brained scheme Quinn comes up with. You have your tax increase, Pat, now cut spending.
Comment by Cincinnatus Monday, May 2, 11 @ 12:15 pm
Cut all of it. Most local governments are still not adjusting to the real estate market (property taxes), and they’ve got to face the changes that are going to be required.
I attended several collar county committee meetings within the last two weeks, and those folks (2 different counties) are still in denial. There are some (a few) board members who “get it”, but very few.
They are still giving the ok to fill vacant positions where there is only marginal need. Salaries are still being based upon 2007 salary studies using 2005-2006 data, with accompanying salary increase data from the same period.
These people are just not living in the real world. The different departments are already hunkering down for this year’s budget negotiations, and of course, they can’t cut anything. It’s nuts..
Only one requirement - 100% of any local government “revenue sharing” cuts go to paying off past due bills. No New Spending! Once the past due bills are paid off, then the money goes back to the local governments.
Comment by Judgment Day Monday, May 2, 11 @ 12:15 pm
And yes, I realize that transfer payments are part of the spending in state budgeting. So is education, so is Medicaid. Cut there too and then we can talk about transfer payments as part of the overall plan.
Comment by Cincinnatus Monday, May 2, 11 @ 12:18 pm
If more burden is put on local government then the control and decision making about what services to cut or how to allocate and to tax is much closer to the actual citizen taxpayer in the jurisdiction than when decisions are made in Springfield. Local elections and the quality of candidates will take on more importance and the effects of policies and spending will be more obvious within the state’s towns and villages.
Comment by Responsa Monday, May 2, 11 @ 12:20 pm
From a distance this sounds like a no-brainer. But local governments are subject to the Property Tax Extension Limitation Law (PTELL). This requires a local government to raise property taxes the following year by a max of 5% or the CPI, whichever is lowest. There have been CPI increases of less than 1%. So if Village of Greenacre loses state funds, it can’t just raise its local levies to make up the difference.
There are some exceptions…localities that are home rule units of local government can do as they choose. But that’s a minority.
So what is a solution? If state aid to municipalities is lessened, then suspend, repeal, revise, or modify PTELL. State cuts aid to municipalities…locals are closer to the tax-paying public and have great angst on this. It probably results in smaller tax increases than we think.
Others have said this in other posts, but this isn’t about tightening your belt. Losing state aid to municipalities could mean fewer cops, fewer fire stations and firefighters, crappy curbs and gutters and intersections…so in the end it is about public safety.
By the way, I am not a cop or a firefighter, I actually own a business and pay taxes too. If balancing the state budget means less state aid, then give the locals tools they can, if they choose, use.
Comment by Mongo Monday, May 2, 11 @ 12:22 pm
@Responsa
No, the vast majority of people registered for “local” elections won’t ever care. There’s a very strong apathetic sentiment among people these days. Why, I have no clue. Wouldn’t it be great to see an election result with over 90% turnout?
Comment by PaGo Monday, May 2, 11 @ 12:26 pm
I’m all for shared sacrifice, but with the cuts that are necessary at the State level, some of that will have to be picked up at the local level. I would be all for line-item budgeting for municipalities, but I don’t think that they can sustain a cut, which I’m guessing would be a lower percentage of the sales tax that they receive. These municipalities aren’t getting much help from the State as is, if we cut their funds even more, I think we will see some very significant infrastructure problems due to inability to fund repairs (sewage treatment, water treatment, etc.)
Comment by tak1885 Monday, May 2, 11 @ 12:32 pm
State income tax makes up 10% (nearly $3 mil) of DeKalb’s budget. Losing it would probably not be catastrophic, but the pile of straws is looking mighty big.
We are already down more than a half-dozen first responders since 2007, 1100 homes in a stage of foreclosure or already vacant, 45% of our schoolchildren now from low-income households, every single tax and fee already raised, and our largest employer (NIU) seeing declining enrollment.
A lot of it is our own darn fault. Our so-called leaders have consistently acted as if the tough times would pass any minute now. You would not believe the amount of construction we have going on, for example.
Still, I know who would suffer, and it wouldn’t be the ones who got us into this mess.
So what I’m saying is, I can’t answer the question.
Comment by yinn Monday, May 2, 11 @ 12:32 pm
Local governments have built in these revenues into their long-term budgets, and have relied on these funds for decades. The State should fix its problems by focusing on state funded programs, and not on locally-funded programs that the State just indirectly supports.
Comment by Not It Monday, May 2, 11 @ 12:33 pm
In my locality I feel that there is a lot of wasteful spending. The answer that seems to be given a lot though runs along the lines of “It’s a grant so it’s not…etc.” or “The state’s paying for it, not us.” For some reason there seems to be a distance from realizing that the source of the funding is the taxpayers. Cut the funding, pay the bills and if locals want local projects let them pay for them
Comment by Bond_Player Monday, May 2, 11 @ 12:33 pm
The state should come up with a phased planned to end all of the local government revenue sharing. If local governments want something, they should fund it themselves. But cutting it outright in full right now would be problematic, at best. It needs a controlled ending.
Comment by John Bambenek Monday, May 2, 11 @ 12:37 pm
how does the transfer to cities work - is it that cities get a share of their own citizens’ income tax payments or is it a method of transferring revenue from wealthier to poorer communities?
Comment by Robert Monday, May 2, 11 @ 12:45 pm
@Robert: The LGDF is distributed based on population 10% of state income tax goes to it, (well technically now 6% since muni’s didn’t receive any of the new revenue from the tax increase) so you get x amount per resident.
Comment by Anon Monday, May 2, 11 @ 12:51 pm
I am a fan of how Indiana does sharing of income taxes, the county imposes a local income tax. The way Illinois does it, the vast majority of people are unaware that 6% of their income taxes are going back to local governments. Have a way that the local government decides whether to impose the local income tax. Whether by referendum or ordinance. That way, funding is more transparent. (Ideally, the State would phase out the 0.3% that goes to local governments, and give cities a chance to impose the tax before its phased out, so maybe it’s effective on 1/1/13.) I know that this doesn’t balance the State’s budget since they are not retaining any additional revenue, but then possibly easier to only reduce the tax rate to 4.8%.
Comment by Anon Monday, May 2, 11 @ 12:53 pm
I do believe it should be a shared sacrifice but also, I think the people most local to the spending should pay for it. That should inject a bit of liveliness into local politics.
Comment by cermak_rd Monday, May 2, 11 @ 1:04 pm
I voted no. Revenue sharing should be eliminated, not just cut, and because it’s bad policy, not to balance the budget. The responsibility for raising the revenues to fund a program should be with the government that administers the program. If you separate the two, you get the non-taxing government spending money just because they have it, and the taxing government interfering because they’re paying for it and sometimes cutting the funding because they don’t want to bear the burden anymore. If we really want local control of schools, it has to be paid by local taxes or you don’t really have local control. If you want state funding, the state has to be responsible for the programs funded.
Comment by Pat Robertson Monday, May 2, 11 @ 1:23 pm
My answer to Rich’s polling question was yes, the state should significantly reduce funding to local governments. But unfortunately the question was formulated too simply, reductions to funding for local governmental units should also in part be based on the property tax base of the municipality and effort of that government to tax its citizens (i.e. the rate). One poster raised the Property Tax Extension Limitation Act issue and that is important.
But the City of Chicago, which sucks up these revenues like a vampire, has not raised property taxes even to the cap in numerous years while Mayor Daley handed out dollars like candy. As I have pointed out on this blog before the City of Chicago has a low property tax rate.
According to the Civic Federation Chicago in 2008 had one of the lowest effective property tax rates in Cook County, with 1.31% for residential, 2.35% for commercial, and 1.61% for industrial properties. The residential effective tax rate fell 13.0% between 1999 and 2008, from 1.51% to 1.31% of full market value. The commercial effective tax rate fell 48.9% between 1999 and 2008, from 4.61% to 2.35% of full market value. The industrial effective tax rate fell 62.8% between 1999 and 2008, from 4.34% to 1.61% of full market value.
It is ironic that the Speaker is now open to cutting local government funding for Chicago, since as a property tax attorney he and his colleagues have fought long and hard to keep the City’s rates down.
Comment by Rod Monday, May 2, 11 @ 1:23 pm
I support a roll back. And I don’t want to hear the same spiel that came out of New Jersey when Governor Christie cut various education and municipal costs last year. If a state cuts a portion of its budget, local entities are not “forced” to raise taxes. That is a choice of local government and school officials, and I would hope voters who elect the local school boards, municipal boards and county boards think about that fact during the next respective election.
Comment by Team Sleep Monday, May 2, 11 @ 1:27 pm
I say no. It’s not a sacred cow, but it is a way that we finance government in this state.
Many municipalities do not have home rule authority and are not able to simply raise property taxes to make up for their lost share of the local government fund.
Comment by siriusly Monday, May 2, 11 @ 1:31 pm
It’s that ole’ Goose and Gander thing…
Comment by Captain Illini Monday, May 2, 11 @ 1:44 pm
I voted no because I believe it’s too much of a cut. I think a smaller cut would be preferable unless some of the unfunded pension mandates are rolled back or if the state could find a way to get relief from the unfunded mandates.
Extend the pension reforms to current police and fire employees and you could probably cut the funding by a third without complaint.
Comment by Ahoy Monday, May 2, 11 @ 2:06 pm
Cutting the income tax payments to local governments is a recipe for raising other taxes. Municipalities are just now stabilizing their budgets, you don’t cut into a couple million dollars in revenue for a municipality without creating a problem.
There isn’t much fat left on most municipal operations outside of your highly political fiefdoms like Cicero.
If you’re going to do it, you phase it out over a period of 6-7 years, attach a kind of salary cap on municipal administrative salaries, give small communities the tools to raise replacement revenue, and give broad power for home rule communities to consolidate services with one another.
Comment by Elmhurst Monday, May 2, 11 @ 2:11 pm
How can the geniuses who run the State look at themselves in the mirror- they cram through a gigantic increase in the income tax purportedly to balance the budget and now these same folks want to deprive the citizens of the state a participation in those same revenues in terms of assistance to their local municipal governments- with all due respect Madigan, Quinn and Cullerton truly are lying sacks of you know what
Comment by Sue Monday, May 2, 11 @ 2:21 pm
i voted no. For more than a decade the state legislature has voted to significantly expand police and fire health and pension benefits, without regard to the increased burden to local government. The state has caused a good portion of the debt imbalance. It is unfair for the GA to abandon the towns and cities now.
Comment by LG Monday, May 2, 11 @ 3:04 pm
In case anyone has missed it, local governments get a percentage of the State revenue, so if the state is coming up short, the local governments are already taking cuts. If the State reduces transfers, it’s just insult to injury. Most cities aren’t large enough to have the beauracracy of the State. We’re talking local police, fire, EMS, streets, sewers, etc. The cuts have been made already.
Comment by Anonymous Monday, May 2, 11 @ 3:04 pm
Seems like a poor bluff on Quinn’s part. All politics is local. Passing the pain down to the locals is political suicide. If you want to see increased voter participation, lay off police and fire, and let the potholes go unfilled. That’ll stimulate voter interest, for sure.
Comment by Easily Entertained Monday, May 2, 11 @ 3:09 pm
Republicans claim we can’t borrow.
They insist we have to cut.
One thing to cut is revenue sharing with the locals from the state income tax. The State deficit, after all, is bigger than the average municipal budget deficit.
If Republicans don’t like this cut, then propose an alternative — or reconsider the kneejerk opposition to debt restructuring.
Comment by reformer Monday, May 2, 11 @ 3:18 pm
=== What difference will it actually in make in the long run? The tax payer still pays. ===
I’ve always had a problem with pass-through revenue.
State lawmakers get the grief from taxpayers about how high our taxes are, while local governments spend without any accountability.
Ditto on capping the retailer’s reimbursement for sales taxes.
What I’d recommend on the muni-revenue share, simply from a political perspective, is this: use the percent of kids who qualify for free or reduced school lunch as a means test for which municipalities get revenue.
You could decide, for example, that communities where 50% or more of the kids qualify for free or reduced lunch get 100% of their funding, while wealthier communities don’t.
Or that everyone will receive a pro-rated payment based on their poverty rate.
Comment by Yellow Dog Democrat Monday, May 2, 11 @ 3:29 pm
=== i voted no. For more than a decade the state legislature has voted to significantly expand police and fire health and pension benefits, without regard to the increased burden to local government. ===
As far as I know, that’s a FAT lie. All changes to pensions for police and fire I can recall were part of the agreed bill process and supported by the IL Municipal League.
Anyone know any different?
Comment by Yellow Dog Democrat Monday, May 2, 11 @ 3:31 pm
Another reason to cancel or atleast delay payments to municipalities is that we pay 1% interest per month for delayed payments to state vendors, but there is no Prompt Payment Act penalty for delaying revenue sharing payments for the tax code.
My guess is this is why tax refunds for businesses have also been delayed.
Comment by Yellow Dog Democrat Monday, May 2, 11 @ 3:32 pm
Local governments get a % of state revenues. Since revenues are down for the State, they’re already down to municipalities. Most cities aren’t much more than police, fire, EMS, streets, sidewalks sewers, parks and building departments and they’ve already made their cuts because of declining State revenues and now people want to cut those same services more?!?!?!
Comment by Shemp Monday, May 2, 11 @ 3:37 pm
Yellow Dog Democrat - IML and the cities didn’t go along with all the pension sweeteners the State passed but left cities to fund. Not sure where you are getting that. The only bills they did agree to were ones where IML thought it best to agree to a bad bill instead of being force fed a an even worse bill.
Comment by Shemp Monday, May 2, 11 @ 3:41 pm
I heard that the Federal government will soon be following Quinn’s lead and no longer provide any money to the States.
Comment by Cincinnatus Monday, May 2, 11 @ 3:52 pm
@Shemp - What pension sweeteners?
Again, for as long as I can remember, pension bills have been passed under the agreed bill process.
If you can name a specific bill or provision, that would be helpful.
Anyone - including the municipal league - who thinks that their revenue is too sacred is daft.
That said, its important to keep in mind based on the scenario laid out today for Capitolfax subscribers that a Conference Committee’s formation requires the support of a majority from both chambers.
Comment by Yellow Dog Democrat Monday, May 2, 11 @ 4:01 pm
No sacred cows says 47th ward….the legis, judges, and GA get to keep “their” pensions, “their” raises, “their” benefits while us union folks bite the bullet for everyone. Let them start budget cuts in their own backyard first and lead by example. As for the cuts to local governments, they had better be careful cutting for some of the smaller locals it may just be the staw that broke the camels back.
Comment by Ain't No Justice Monday, May 2, 11 @ 4:04 pm
I’m with you on that one, ANJ.
If Tom Cross and the Chicago Tribune want a test case for the courts, it should be ending the pensions for all current elected officials and moving their assets into a 401-k.
Then pass a trailer bill for retired politicians and let the courts weigh in on that one as well.
Comment by Yellow Dog Democrat Monday, May 2, 11 @ 5:11 pm
I would want further reform in pensions first. The Teacher Retirement System (TRS) allows 6% annual increases for the last 4 years of administrator and teacher careers. That is ridiculous. Name a job that gets a 6% annual increase the last 4 years of their career.
TRS and many Illinois pensions (all?) provide 3% cost of living increases. That is ridiculous. What private pension provides that.
There are more abuses.
Comment by Mark Monday, May 2, 11 @ 9:20 pm