Bloomington Mayor Mboka Mwilambwe has weighed in on the fight over tax money that local governments say belongs to them and not the state.
The state of Illinois started to distribute 10% of all state income tax money to local governments when the state adopted the tax in 1969. That stopped over a decade ago when the state raised the income tax. That funding has never been fully restored, costing municipal and county governments billions of dollars that fund essential services.
Mwilambwe said the state may have had good reason to keep more of that money then when times were tough.
“With the improvement of the fiscal picture in the past couple of years, I believe this is the appropriate time for the LGDF (Local Government Distributive Fund) to be restored to the 10% rate that it was funded at prior to 2011," said Mwilambwe, one of more than a dozen mayors who testified Tuesday before the Illinois House Cities and Villages Committee.
Brad Cole, executive director of the Illinois Municipal League, told the committee the state reduced the local share of the income tax because it raised the tax rate in 2011 and kept all the additional money, while local governments got essentially the same amounts and faced rising costs. Cole noted the local share was raised to 8% in 2015 when the tax increase expired, but in 2017 was reduced again. It’s currently at 6.16%.
Mwilambwe told the committee he endorsed returning to a 10% distribution, but even a 1% increase in the tax share would generate an additional $1.5 million for the city. He said that would help the expand street resurfacing, repair more sidewalks, replace park equipment, expand sewer work, buy 25 police cars or a new fire truck or hire 10 firefighters.
“These funds help us provide much needed services for our communities and contribute to the overall quality of life,” Mwilambwe said.
Lawmakers were generally receptive to the mayors’ requests.
Republican state Rep. Martin McLaughlin of Barrington described the income tax money as a promise to local governments, just like the public safety pensions those municipalities have to fund.
“This actually goes directly to funding a lot of your pension obligations, so for those on this (committee) and those in the chamber that vote to keep this at 40% from where it should be, you are breaking that promise, which is falling down on the job for what we are supposed to be doing as legislators,” McLaughlin said.
State lawmakers also noted local governments have since added new revenue streams for legalized gambling and marijuana sales. Some mayors said cannabis sales have been minimal, or are declining, and not every community has slot machines.
Cole said state government should be able to afford sending the additional revenue to local governments, citing the record $50 billion spending plan lawmakers are considering this spring.
“If municipalities are only asking for 10 cents from every income tax dollar to pay for local programs, services, pensions and so forth — most of which are mandated by the state — then can’t the state of Illinois manage its programs and services with the remaining 90 cents out of every dollar?” Cole asked, adding reductions in the local share have cost those governments $8.3 billion since 2011.
Cole said he'd support keeping the local tax share as is if the state dropped its hundreds of unfunded mandates on local governments.
