ROCKFORD, IL — Cities across Illinois could lose out on hundreds of thousands of dollars each year if Gov. JB Pritzker’s latest distribution plan for income tax revenue is adopted.
Pritzker’s proposed $56 billion budget for 2027 includes another cut to the Local Government Distributive Fund, which would keep more income tax revenue in the state’s coffers and direct a smaller share of the funds to local communities.
In dollars and cents, local officials place the funding loss from a 2011 reduction of about 3.5 percentage points at about $143.5 million, or roughly $9.5 million a year.
According to the Illinois Municipal League, Pritzker is calling for another cut of .25 percentage points. The additional loss to a city like Rockford is an estimated $810,000 a year.
State Rep. Dave Vella, D-Rockford, said he was happy with some aspects of Pritzker’s budget plan but would oppose a decrease in the share of income taxes that goes to Illinois cities.
“That is not something I would ever be in favor of,” Vella said. “Every year we push for the LGDF to be taken out of the state budget and given back to the cities. So I would never be in favor of that.”
Rockford Mayor Tom McNamara has argued for years that the state has “stolen” the city’s share of income taxes as it mandates huge pension cost increases. He has called for restoring the fund to its pre-2012 level of 10% to relieve the pressure on property taxes and other revenue streams.
State Sen. Steve Stadelman, D-Loves Park, said he expects there to be intense debate on the budget and the proposed reduction before they are approved. He also said the measure is meant to keep the amount of actual dollars cities receive the same, even as it reduces the percentage that flows to them.
“They still get the same amount of money, so I wouldn’t describe it as a cut,” Stadelman said. “Maybe it’s not as much percentage-wise as they would have gotten under the current formula … but at the end of the day the money is still about the same as we deal with these fiscal pressures caused by Washington D.C.”
Cuts to the fund would hurt local residents and affordability, Illinois Municipal League CEO Brad Cole said.
“Any reduction in shared revenues results in a direct cost increase to residents — this means property tax increases, sales tax increases or any number of other local tax increases to make up the difference,” Cole said in a news release.
State. Rep. Maurice West, D-Rockford, said he, too, would not support further cuts to the distributive fund.
“I am on the cities and villages committee in the House for the primary reason of increasing the percentage of the Local Government Distributive Fund,” West said. “So that gives me concern. That’s something we definitely need to talk about.”
This story was updated to correct an inaccuracy.
Jeff Kolkey writes about government, economic development and other issues for the Rockford Register Star. He can be reached via email at jkolkey@rrstar.com and on X @jeffkolkey.
This article originally appeared on Rockford Register Star: Illinois cities could face another cut to share of income taxes
Reporting by Jeff Kolkey, Rockford Register Star / Rockford Register Star
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