State Could Shortchange Village of $1.76 Million

To cope with Great Recession revenue declines, the Village of Morton Grove slashed its staff, severely cut services, borrowed money, raised taxes and just barely managed to balance its budget this year on the head of a pin.

Now the state legislature, which has its own budget hole to fill, is considering holding back between $530,000 and $1.76 million of state income tax money the village is due.

To put that in perspective, the village would have to raise its property tax levy between 5.49 and 18.24 percent to make up for it.

Or fire between seven and 22 police officers.

"Beyond Bone and Into Marrow"

Both of those are examples cited in an article on the village website, which encourages local residents to call lawmakers and urge them not to pass the cuts.

“We are almost beyond bone and into marrow,” Village Administrator Joe Wade said about cuts that have already been made. “It would decimate [the budget].”

A pending bill in the state senate would use money from what’s called the Local Government Distributive Fund (LGDF) to help fill the state's estimated $8 billion budget hole.

In addition to income taxes, the fund is used to collect and share sales and gas taxes with local governments.

Bipartisan Support at State Level

In the past two years, both Democratic and Republican legislators have proposed using that money to help stop the bleeding in Springfield. The bipartisanship is unnerving, said Wade.

“I am very worried,” he said. “When you get desperate, it’s easy fruit to grab because it’s out of somebody else’s basket.”

Springfield already raised the state income tax from 3 to 5 percent to generate new revenue. But rather than share 10 percent of the new income tax money with local governments, lawmakers voted to keep all the increase in revenue for state obligations.

Meanwhile, the amount of state income tax that local governments continue to get has been hard hit by the recession.

“When the income tax was created in 1969, it was a state and local tax,” said Larry Frang, director of the Illinois Municipal League. “The thinking was that it would be easier to collect.”

“Now the General Assembly is saying we don’t have to share it with you.”

Local Impact of State Funding 

According to the organization’s calculations, local municipalities will have lost $223.5 million in income tax revenue between 2008 and 2012 because of recessionary factors.

In Morton Grove, the local share of state income tax has fallen from a high of $2.1 million in 2008 to $1.76 million in 2010.

“We have been living through a three-year period where all the revenue sources are going down,” said Frang. “We can’t take much more.”

State Sen. Ira Silverstein, who is on Morton Grove’s “please call” list, said he’s been hearing from the mayors in his district, which includes Lincolnwood, Skokie, Niles and Morton Grove.

 “I am concerned about it,” Silverstein said. But he said he had not read the bill or made up his mind how he would vote on it.

“I don’t know if it’s even going to come up for a vote.”

Wade said the cuts would require a budget hearing and painful cuts that would affect basic and vital services.

“We’re beyond discretionary spending now,” Wade said.

“We’re past tree planting. We’re past tree-trimming. I would have to recommend layoffs in the police and fire department.”