Non-profit argues doling out more dollars to local governments is money poorly spent
A bill that would divert an ever-increasing amount of state tax dollars each year to local governments passed the House in early March but remains in the Senate as of the summer legislative break.
The Illinois Policy Institute says it should die there.
According to the Department of Revenue, House Bill 278 would reduce the Illinois General Revenue Fund by $100 million in 2018, $175 million in 2019, $258 million in 2020 and $314 million in 2021.
"After that, the amount of deposits into General Revenue Fund would be reduced increasingly, as individual income tax and corporate income tax revenue keep growing," the Revenue Department's fiscal note says.
The increase in state spending would consequently result in more of a burden on Illinois taxpayers, according to the Illinois Policy Institute, which said the state already spends $8 billion more than it takes in and has a $12 billion unpaid bill backlog and a $130 billion pension crisis.
“The bill would raise the percentages of individual and corporate income tax revenues that the state will send to Illinois’ local governments by way of the Local Government Distributive Fund, or LGDF," the institute posted on its website. "Through the LGDF, the state funnels income tax dollars to local governments based not on need, but on their pro rata share of the state’s population. The LGDF has $1.3 billion in state income tax collections that it will pay to cities and counties.”
Starting in 2020, 10 percent of net state individual and corporate income tax revenue will go to the LGDF -- an increase of 2 percent.
"Rather than increasing funding to the LGDF, lawmakers should put an end to all LGDF distributions to counties and municipalities with populations above 5,000," the institute argued. "Requiring local governments to spend within their means, rather than encouraging bloated bureaucracies and expensive perks through state funding, is an important step toward reining in property taxes.”