Skokie Set To Lose Out On $660,000 In Funding From Pritzker Cuts

SKOKIE, IL — Already facing a projected $2.7 million deficit for the fiscal year that began this month, village officials say Skokie stands to lose out an additional $660,000 if Illinois lawmakers approve a proposed cut to local governments' share of state income tax revenue.

As part of his proposed budget for the fiscal year starting in July, Gov. J.B. Pritzker proposed cutting 10 percent — about $152 million — from Local Government Distributive Fund, or LGDF, money provided to municipalities.

According to the governor's office, local governments will actually receive $76 million more in the coming budget due to increased revenue under the government's budget proposal due to modifications to corporate tax deductions and other "loopholes."

In a memo to the village board ahead of Monday's meeting, Village Manager John Lockerby said revenue received from the LGDF accounts for 11 percent of the operating budget.

The governor's proposed reduction would mean a loss of almost 1.2 percent of the village's $56.52 million total revenue for the coming year's budget.

That does not include additional federal relief money tied to costs associated with the coronavirus pandemic.

Skokie is expected to receive an additional $15.34 million in funding from the American Rescue Plan Act, the $1.9 trillion bill signed into law in March.

"While the Village is aware of federal funds being allocated to local government as part of the American Rescue Plan, there are no funds included in the budget as there has been no formal notification of amount or schedule of disbursement," Lockerby said last month in a budget message.

The LGDF dates back to the creation of the income tax in Illinois, which had been forbidden by the state's 1870 constitution. In 1969, with a new constitutional convention on the horizon, Republican Gov. Richard Ogilvie and Richard J. Daley, the Democratic mayor of Chicago, brokered a deal that established a flat income tax, with rates of 2.5 percent for individuals and 4 percent for businesses.

The next year, the state constitution codified the flat tax, which has since risen to 4.95 percent for individuals and 7 percent for corporations, and blocked local governments from establishing their own income taxes.

For the next 43 years, the state distributed 10 percent of the money collected to the local governments where the money was divided by population.

Then in 2011, state lawmakers "temporarily" raised the state income tax but decreased the share devoted to municipalities to ensure the increased revenue went to the state. In 2017, the local governments' share was cut again when the state income tax was permanently increased, and as of the fiscal year ending in June, local governments receive 6.06 percent of income tax revenue from individuals and 6.845 percent from corporations.

Lockerby asked trustees to endorse a resolution calling on the restoration of local governments' share of the money.

"[I]n addition to LGDF cuts over the years, the State has also reduced municipalities’ share of the personal property replacement tax and increased sales tax collection fees, while cities and villages have had to fund skyrocketing pension costs established by the State legislature without any State funding to support them," according to the resolution.

"[U]nfortunately those municipalities with fewer revenue sources, such as retail businesses with higher equalized assessed values on property, may be forced to explore increasing property taxes or cutting services amid further LDGF reductions."

EARLIER: Spending Cuts Reduce Skokie's Deficit By Nearly $5 Million

In November 2020, after more than 53 percent of Illinois voters rejected a constitutional amendment that would have permitted a progressive income in the state, Pritzker warned "painful" cuts or income tax hikes would be needed.

Skokie is set to join local leaders from across the state in opposing the move to cut funding from the LGDF.

Northwest Municipal Conference President and Highland Park Mayor Nancy Rotering said state lawmakers continue to heap unfunded mandates onto local governments while cutting off their sources of revenue. She said the estimates of increased local revenue from closing the "corporate loopholes" are uncertain and cannot be compared to reliable LGDF revenue already pledges to municipalities.

"Let's see the state go forward and accrue those revenues from those other sources, but in the meantime don't take down cities in the process," Rotering said. "The state obviously has significant financial challenges. Leave the municipalities' money out of it. Let us have the revenues that are due to us and continue working on other opportunities for revenue for the state."

Orland Park Mayor Keith Pekau said his village expects to lose about $400,000 in revenue from the LGDF. That comes out to about 0.25 percent of the $151 million in revenue expected this year.

"Because [state officials] cannot balance their own budget, they are balancing it on the backs of municipalities," Pekau said last week, "which really means they are balancing it on the backs of you."

Some state lawmakers have sought to restore local funding to the full 10 percent of income tax revenue.

"I have spent close to three years in the Illinois Senate working to get LGDF funding back up to 100% where it belongs," State Sen. Donald DeWitte, a St. Charles Republican, said last week in a statement.

"These LGDF dollars are municipal funds," DeWitte said. "They are not overflow funds that can be used to fill state budget gaps. Our municipalities are struggling, and they rely on LGDF funds to balance their own budgets."

Many Illinois municipal leaders are lobbying their constituents to contact their state legislators in an effort to block the reduction in funding, which they said lead to higher property tax bills across the state.

Kevin Wallace, mayor of Bartlett and chair of the 275-member Metropolitan Mayors Caucus, said LGDF money guaranteed to local governments is responsible for funding essential services like public safety, maintaining infrastructure and collecting garbage.

"LGDF is money that comes from our individual municipalities and has been generated by local residents," Wallace said. "It legally belongs to our communities – not as a bailout for state government."

Lawmakers have until the end of the month to approve a budget with a simple majority. After that, a supermajority is required.