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Village to State: Don't Cut Our Share of Tax Revenue

Village of Burr Ridge officials think a proposal to help cut the state's deficit by reduced sharing with local government would be ruinous.

Keep Burr Ridge tax dollars in Burr Ridge.

That is the unanimous message the Burr Ridge Board of Trustees sent to Illinois Gov. Pat Quinn and legislative leaders. Last week the board passed a resolution urging the General Assembly and the governor to oppose any further reductions in state-collected revenues. The resolution also demands that no further action be taken to “financially ruin municipalities.”

With the state facing looming debts, some lawmakers, including members of the Senate Republican Caucus, proposed a plan to cut the local share of state income, sales and fuel taxes by $300 million next fiscal year. That proposal has raised the ire of many suburban mayors, including Burr Ridge Mayor Gary Grasso. Grasso said the state has failed to live within its means and is trying to pay off its debts by raiding village coffers.

“This is not the answer,” Grasso said.

Grasso said municipalities have accomplished what lawmakers in Springfield have refused to do–live within their means.

“This is our money, not theirs.”

Grasso joined about 50 other mayors, village presidents, trustees, managers, police and fire officials to voice their opinions about the proposal in a press conference last Thursday. The mayor was featured in a story by NBC Chicago on the conference.

The revenue in question is collected in the Local Government Distributive Fund, which was created in 1969. The state collects the money and sends it to the municipalities each month. From its creation until January 2011, municipalities and counties received 10 percent of all state income taxes paid. Now they receive only 6 percent, despite an increase in state income taxes passed by the legislature during the veto session. This proposal would cut that amount even further.

According to the DuPage Mayors and Managers Conference the $300 million proposal amounts to a decrease of $23 for every person in every community. A municipality with a population of 10,000 people would lose $230,000 out of this year’s budget.

Grasso said if any of the revenues are not returned to the municipalities, it will have a devastating impact on village services. Village manager Steve Stricker said he’s not sure how much funding would be lost, but said any amount would be “catastrophic.”  Grasso said he’s heard legislators use multiple amounts for withholding, anywhere from 5 to 10 percent, which could range from $150,000 to $800,000.

“That doesn’t sound like a lot of money, but when you’re dealing with an annual operating budget of $8.2 million, that’s a significant amount,” Grasso said.

He said any reduction of funding will mean a negative impact to essential services provided by the village. If that happens, Grasso said village leaders will have to consider an option that includes a local tax increase to keep police officers, firefighters, and snow plows running.

“Our residents will be angry with us because we were the ones who had to ask for more tax dollars while the state lawmakers will be able to walk away from this cleanly,” Grasso said. “The people are not going to blame them, they’re going to blame us.”

As the economy worsened, Grasso said the village responded by paring down on personnel by cutting 10 percent of the village’s full-time work force.

“We have already made major cuts to the budget in excess of $1 million,” Stricker said.

Brie Callahan, press secretary for Quinn, said the governor is trying to be “open and realistic about the budget.”

“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. 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,” Callahan said in an email. “…we are at the end of the fiscal year and we have payments that need to be made now. 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.”

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