Mayors denounce ‘stealth’ tax; demand local share of income tax
By Lauren FitzPatrick Sun-Times Media/lfitzpatrick@suntimes.com May 12, 2011 5:44PM
Palos Hills Mayor Jerry Bennett speaks at a press confernce to denounce plans by the General Assembly to create a "stealth tax" and pilfer local budgets causing an increase in taxes and fees in the SOIC press room. Chicago,Ill.Thursday, May 12, 2011 | Brian Jackson~Sun-Times
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Updated: August 25, 2011 12:31AM
Suburban mayors already cut staff, froze pay, reduced services and imposed furlough days to balance their budgets during the recession.
So why can’t the General Assembly, dozens of local leaders wondered Thursday as they rallied against a proposal in Springfield they said would steal local tax revenue to fix the state budget mess Springfield itself created.
“These are tough decisions, and across the state mayors, have been making them for the past three years,” Aurora Mayor Tom Weisner said. “Contrast that with the state, which has dawdled and equivocated for the past three years.
“We ask you, our Legislature, don’t take police and firemen off our streets with another tax increase on our residents, a stealth tax,” he said. “It’s time for Springfield to clean up its own mess.”
Since 1969, Illinois has returned a share of the state income tax revenue it collects to municipalities, though some state officials are talking about reducing the local share — or eliminating it altogether — even while the state has raised the income tax overall by 66 percent.
Municipalities use their portion of the income tax to pay for their police and fire departments, and for other services such as snow and trash removal, the officials said.
“This money was never theirs to take away or be negotiated with (and the state is now saying) ‘We’ll chop you from 10 percent to 6 percent or possibly take it all,’” Lynwood Mayor Eugene Williams said among the restless bunch of local leaders.
“This money that should be coming back to us ... was always designed to go back into the municipalities. That’s why we agreed to be taxed in the first place. The state is the collecting agent for monies that are supposed to come back to the villages.”
Aurora would lose up to $15 million, Weisner said. Orland Park mayor Dan McLaughlin said his village could lose $1.4 million. Oak Park could lose $4.5 million, about 10 percent of its general fund.
Illinois faces a budget deficit of estimated as high as $9 billion — even after the income tax increase. Gov. Pat Quinn has proposed borrowing some $8.75 billion to bridge the gap.
“We want to pay all bills owed by the State of Illinois — including payments to local governments — but we are out of resources and out of time,” Quinn spokeswoman Brie Callahan said in an emailed statement.
“Senate Republicans have proposed cutting $300 million a year from local government payments, which the Governor opposes. Our proposal delays payments while we address immediate financial deadlines,” she wrote.
“We are in a position where we stand to lose hundreds of millions in federal Medicaid match if we cannot pay our share. Our hands are tied.”
Quinn instead has threatened to further delay about $1 billion in income tax payments to the local governments. The state already has delayed disbursements to towns by three to six months.
“We have a governor trying to blackmail us ... trying to squeeze us to get to the members of the General Assembly and convince them about his borrowing plan,” Palos Hills mayor Jerry Bennett said. “That’s their problem Downstate.”
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