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Tuesday, March 3, 2015

Governor Seeks Cuts to Local Revenues & Possibly Number of Local Governments

As we’ve previously discussed on this blog, Illinois Governor Rauner’s proposed budget seeks to reduce the local government share of state income taxes by 50%, cutting $600 million from the Local Government Distributive Fund. Advocacy group “Voices for Illinois Children” prepared a widely-circulated analysis, available here, estimating the amount of revenue that would be lost under the Governor’s proposed budget. Chicago would lose the most revenue, more than $133 million, and more than 100 units of local government would each stand to lose amounts in excess of $1 million. Communities without significant reserves or alternative revenue sources, whether due to small tax bases, lack of local businesses, or the Property Tax Extension Limitation Law (PTELL), would be most affected. Many municipalities are already increasingly relying on local sales taxes to generate revenue, a trend that could increase for some communities if the Governor’s proposed budget becomes law.

Meanwhile, Governor Rauner is taking on local governments on another front, forming another task force to study possible reductions in Illinois’ nation-leading number of local governments. Executive Order 15-15 creates the “Local Government Consolidation and Unfunded Mandates Task Force,” charged “to study issues of local government and school district consolidation and redundancy, and to make recommendations that will ensure accountable and efficient government and education in the State of Illinois.” Specifically, the Task Force will:
  1. Conduct a comprehensive review of State laws relating to local government and school district consolidation;
  2. Conduct a comprehensive review of State laws relating to unfunded mandates on local government bodies and school districts;
  3. Identify opportunities to consolidate, streamline, or eliminate duplicative government bodies, school districts, and taxing authorities;
  4. Identify opportunities to replace, revise, or repeal unfunded mandates placed on local government and school districts;
  5. Discuss solutions and impediments to consolidation of local governments and school districts;
  6. Analyze the success of programs and legislation with similar goals implemented in Illinois and other states; and
  7. Prepare a final report to the Governor and the General Assembly making specific recommendation to consolidate local governments and school districts with the goal of improving the delivery of government and education services at a lower cost to State taxpayers. 
Chaired by Lieutenant Governor Evelyn Sanguinetti, the Task Force will hold at least four meetings throughout the State, and is due to deliver a final report to the Governor and General Assembly by December 31, 2015. The Governor will appoint the other members from both public and private organizations to serve on the Task Force, including state lawmakers, school district employees, and other local government officials.
It is too early to tell whether the Task Force itself might be redundant, where the General Assembly’s Local Government Consolidation Commission concluded in a report last year that “simply reducing the number of local governmental units does not necessarily result in a reduction in costs to the taxpayer” and therefore recommended no “force[d] cooperation or consolidation on any local units of government as . . . such action might not result in savings or efficiencies.” In any event, based on the harsh budgetary climate in Springfield, local governments should monitor the work of the Task Force and any of its proposed consolidations or reorganizations.

Authored by Daniel J. Bolin and Douglas E. Spale, Ancel Glink


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