Local governments look for additional $500 million from state income tax funds

[April 01, 2022]  By Greg Bishop | The Center Square

(The Center Square) – Local governments could see an additional $500 million dollars for their share of state income taxes, something that could help fund local services and control local taxes.

The Local Government Distributive Fund, or LGDF, was instituted when the state implemented an income tax decades ago. The LGDF sends a percentage of state income taxes back to local governments as a way to keep local governments from implementing their own income taxes.

“If the state is experiencing the positive revenues that it says that it is and there are additional resources available, then the money that is rightfully due to local governments should be distributed back to them,” Illinois Municipal League Executive Director Brad Cole told The Center Square.

State Rep. Anthony DeLuca, D-Chicago Heights, has for years tried to restore the LGDF rate to 10%, where it was historically. The rate was knocked down to 6% more than a decade ago. This year, DeLuca is eyeing an increase to 8% for the coming budget that begins July 1.
 

“It’s a more reasonable number, that’s [an additional] $500 million,” DeLuca told The Center Square. “But I just don’t think it’s reasonable to ask for a billion dollars in one years.”

He said the additional $500 million will go a long way.

“Most municipalities in Illinois do not have taxing authority, they’re non-home rule, and they don’t have the ability to just create a new revenue stream,” DeLuca said.

In Sherman, village President Tervor Clatfelter said getting increased funds will go a long way.

“If we have those revenues put back into our budget, then it allows local city councils to not have to increase or hold the line on any kind of property tax and even any other business tax,” Clatfelter told WMAY.

Cole agreed, local governments will use the increased money to help provide relief to taxpayers.

“Those are dollars that would then go so that municipalities don’t have to raise property taxes, so that they can contribute more to pension obligations and so that they can provide the services that their communities want,” Cole said.

Lawmakers are in session through April 8. It’s expected a spending plan, including how much LGDF will go out to local governments, will be approved before then.

Greg Bishop reports on Illinois government and other issues for The Center Square. Bishop has years of award-winning broadcast experience and hosts the WMAY Morning Newsfeed out of Springfield.