 To date, that motion has failed to pass. However, the state
has come up with a new idea: take away the city's share of increased
income tax.When individuals file their income tax returns with
the state of Illinois each year, that money goes into a pool, and
municipalities receive a percentage of the total collected, based on
per capita figures, not actual income of a city's residents.
The result is that even though wages may not be increasing in the
city of Lincoln, if they are increasing elsewhere, Lincoln has the
potential to benefit from it.
Based on information from the Illinois Municipal League, Snyder
outlined in the text below how the state's plan to freeze
municipality income taxes would affect Lincoln's share.
(Copy)
The Senate
Democratic Caucus has offered an FY2013 budget proposal that freezes
the amounts municipalities and counties receive from the state
income tax. That would mean any growth in the income tax would not
be passed on to local governments.
Based on Illinois
Municipal League estimates, holding back LGDF growth will cost
municipalities and counties approximately $20 million to $50 million
as follows:
If the income tax
grows 2%, local governments statewide lose $20.9 million or $1.63
per person (equaling a $23,635 loss for Lincoln).
With 3% growth, the
loss is $31.3M statewide, $2.44/person, $35,380 to Lincoln.
With 4% growth, the
loss is $41.8M statewide, $3.26/person, $47.270 to Lincoln.
With 5% growth, the
loss is $52.2M statewide, $4.07/person, $50,015 to Lincoln.
The State will
counter that the proposal "holds local governments harmless" because
only those revenues in excess of what was collected last year would
be taken away. It should be remembered, however, that cities like
Lincoln were "held harmless" when the state elected to increase the
income tax and kept 100% of that new revenue.
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That change reduced
the local government share from 10% of total collections to 6%.
Despite a reduction in the local percentage of total receipts, it
was understood that municipalities and counties would continue to
benefit from any growth in income tax collections. This most recent
proposal will keep us from capturing anywhere from $23,635 to
$59,015 in growth and is a clear reduction in state income tax
revenue.
Snyder reminded the council that when Illinois proposed to
increase the state income tax, the state gave municipalities
nothing, but promised that cities would still reap the benefits of
increases in net income of the filers.
However, the state is now threatening to take those increases as
well.
Chuck Conzo, city treasurer, also commented on this, saying that
even though the state is taking money away from municipalities, the
state is not reducing any of the mandates attached to state
revenues.
Conzo added that what we are seeing is that the state is trying
to raid every possible fund to solve its own problems.
This new idea has not yet been passed through the House and
Senate. Snyder told the council he has contacted Sen. Larry Bomke
and expressed his concerns over the proposed change.
Snyder ended his comments to the council by saying: "I would
argue that any job growth that Illinois has seen has been largely
the result of private enterprise, local businesses expanding and
growing. A little piece of that, I think, comes from local
government working at it, encouraging their businesses to grow, and
now the state is saying, 'You go ahead and grow; we'll take all the
increased revenue.'"
[By NILA SMITH]
Past related article
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