Local governments in Illinois have never been allowed to levy income taxes. Instead, they were promised by State leadership a share of State income tax proceeds to be distributed by population from a newly created fund called, the Local Government Distributive Fund (LGDF).
From 1993 to 2011, local governments received 10 percent of the State income tax through the LGDF. In recent years, however, the local share has dropped to just over 6 percent, nearly a 40 percent reduction over the past decade. This has put significant strain on local governments and has forced them to make tough decisions on budget and service cuts and increases in other local revenue sources.
Caucus Position: When Legislative Leaders and Governors reduced the local share of the income tax from 10 to 6 percent eleven years ago, it was with the understanding that it would be restored to 10 percent of the full individual and corporate tax rates once the State dug its way out of its budget hole. The thought was that the State’s fiscal crisis would be resolved in a few years. Unfortunately, the budget holes only became deeper. That is, until now. With more sound financial leadership in the last few years, Illinois finds itself with a budget surplus.
The LGDF is one of the largest sources of state funding for local governments in Illinois. On average, they rely on it to cover more than 25 percent of the day-to-day services they provide to their residents. These include police and fire protection, snow removal and garbage collection, road repairs and maintenance, flood prevention, and water and sewer service.
The Metropolitan Mayors Caucus strongly believes it is time for Illinois’ current leadership to live up to the pledge made by their predecessors and continue to restore the LGDF share to the 10 percent it was in 2011. The residents of Illinois deserve to have their local government funding restored!