Village Officials Express Relief That LGDF Revenues are Safe for Now

Downers Grove officials are relieved to have dodged a bullet—the loss or reduction of state collected tax revenues—which they say would have done serious damage to the village budget.

"We're elated it didn't go through. It would have had a disastrous impact on the current finances of the village," said Mayor Martin Tully.

Illinois municipalities have been receiving a share of income taxes, collected in the Local Government Distribution Fund, since 1969. From its creation until the January 2011, municipalities and counties received 10 percent of all state income taxes paid. Now they receive only 6 percent, despite an increase in state income taxes passed by the legislature during the veto session. Proposals floated by some members of the state Republican Caucus and, later, Gov. Pat Quinn, would have cut that amount even further.

The impact in Downers Grove would have been a minimum loss of $1.1 million, which would have prompted further cost-cutting, increased taxes and fees, or both. 

"Specific cuts were not identified, but would have no doubt been addressed as part of the Long Range Financial Planning process now underway," said Doug Kozlowski, village communications director.

"It was the elephant in the room, but we didn't know if the elephant was going to leave or how big the elephant was going to be," Tully said.

The Village Council passed a resolution May 10 opposing plans to cut the village's share of collected revenues, which in 2010 contributed $3.8 million to the General Fund. The village also encouraged residents and businesses to "tell Springfield to preserve the local share of revenue" via a posting on its website.

"The village watched this closely and actively voiced opposition to any reduction of its shared income tax revenue," Kozlowski said. 

Tully, who assumed office a month ago, followed former Mayor and State Sen. Ron Sandack's lead in writing letters to state lawmakers protesting the proposal. He also joined the village in working informally with other towns to press local representatives in the Illinois House and Senate to withhold support of the measure.

Sandack was one legislator who didn't need to be told about the potentially devastating impact of the loss of LGDF revenue. "As mayor, I was always interested in those municipal monies," he said. "My opinion did not change when I went to the State Senate. I objected to any diminution of local government's distributed share."

Municipalities had "a pretty aggressive campaign on this," he said. "They wrote letters, emails." The DuPage Mayors and Managers organization, the Illinois Municipal League and "a slew of lobbyists and other interest-holders in the campaign to fight the reduction" were heard from.

Among those were the village's contracted lobbyists, Nicolay and Dart LLC, who pressed the issue "under their existing contract," Tully said.

Sandack also pressed the issue with his colleagues. "It wasn't a difficult issue because I had just left the municipal environment and was able to speak intelligently on what local municipalities were facing," he said. "I was able to walk people through what the impact would be."

As one of several former municipal officials in the General Assembly, Sandack meets monthly with a "unofficial local government caucus" to discuss issues of concern to Illinois municipalities. "We talk about these things. It's really been an interesting group."

But while the bullet may have missed the LGDF mark this time, Burr Ridge Mayor Gary Grasso, the newly elected president of DuPage Mayors and Managers Conference, cautioned that vigilance is still necessary. The Village Council ended its membership in the organization last July.

Grasso said he intends to make the organization more politically active in Springfield so the state does not try to balance its budget on the back of the municipalities. He said the organization cannot afford to take a passive role while the economy is weak and the state carries as much debt as it does.

He said he’s hearing rumors that lawmakers may revisit this revenue notion in the fall veto session.

Tully, too, is concerned Illinois municipalities may not have heard the end of the issue. "The problem now is that it's raised its ugly head and there is nothing to say it won't raise its ugly head again."