Income Tax Revenue Sharing Loss Would Cost McHenry County Governments $16.9 Million

The McHenry County Council of Governments (McCOG) has calculated how much money each village and city in the county would lose in state subsides should Governor Bruce Rauner’s budget recommendations be enacted.

The Govenror suggests cutting the subsidy in half.

The total loss for the municipalities all or partially in McHenry County would be $13.8 million.

In addition, County government would lose about $3.1 million.

Income tax is distributed according to the number of people counted during the last census.  From the information below, it appears the estimated income tax distribution for this year is $97 per person, with a projected increase of $2 next year.

McCog Sales Tax Loss Estimate Rauner 2015

The Metropolitan Mayors Conference has put out the following press release:


The Metropolitan Mayors Caucus is extremely disappointed in Governor Rauner’s call to reduce the local share of the State income tax by 50 percent which he announced in his Budget Address to the Illinois General Assembly today in Springfield.

The Caucus’ member mayors from 273 municipalities in the Chicago metropolitan area are very concerned about how this $600 million cut will affect their abilities to provide essential services to their residents.

They are surprised that the Governor proposes to transfer The State’s budget problem to local government.

The local share has been an important revenue stream for municipalities since the income tax was first instituted in Illinois in 1969.

Local communities have counted on it for 45 years to help fund key public services like police, fire, water and sewer treatment, infrastructure repair and construction and snow removal.

A 50 percent sweep of these funds will reduce the revenues for these needed local services by nearly $50 per resident.

The City of Chicago would, see its local share cut by about $135 million each year under the Governor’s proposal.

A town like south suburban Sauk Village with a population of 10,000 would see an annual cut of approximately $500,000.

A community of 25,000 like Batavia in Kane County would experience a cut of about $1.25 million annually.

Orland Park in southwest Cook County with a population of 60,000 would see its annual local share cut by approximately $3,000,000.

The City of Aurora with a population of 200,000 would see its annual local share reduced by about $10,000,000.

Cuts of these proportions will undoubtedly have significant negative impacts on local services.

Local governments across Illinois are still feeling the effects of the 2008 recession.

They have acted in a fiscally responsible manner during the economic downturn and have been reducing personnel, cutting services and controlling spending to balance their budgets over the last several years.

The Governor’s proposed 50 percent reduction will lead to more layoffs; additional delays and cancellations of more infrastructure projects; and increase local taxes and user fees.

“I’m not sure Governor Rauner understands the affect this proposal will have on local governments,” said Daniel J. McLaughlin, Mayor of the Village of Orland Park and Chairman of the Metropolitan Mayors

“Our annual budgets have already been adopted. Communities are counting on their share of the income tax to pay for local services. Reducing revenues will force communities to have to make further decisions to lay off police officers and firefighters, end repairs to critical infrastructure and cut other key services. These are real decisions that will impact the everyday lives of our citizens. They’re not just moving commas in a ledger like they may be doing in Springfield.”

During the campaign, Governor Rauner spoke about working in partnership with local governments to better serve the residents of our State. The Mayors of the Chicago region are highly disappointed that as one of his first acts, the Governor has chosen to shift the State’s budgetary problems onto local governments. This is not acting in partnership.

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The Metropolitan Mayors Caucus is a membership organization of mayors from Northeastern Illinois’ 273 cities, towns, and villages. The Caucus pushes past geographical boundaries and local interests to work on public policy issues, providing a forum for metropolitan Chicago’s chief elected officials to collaborate on common problems and work toward a common goal of improving the quality of life for the millions of people who call the region home.

Here is the Illinois Municipal League press release:

Governor Rauner Calls for Significant Cuts in Budget Address

Governor Bruce Rauner delivered his first and highly-anticipated budget address earlier today. In the days leading-up to the speech it became clear that local government revenues would be included in these significant cuts.

The Governor’s Budget Address confirmed this to be true.

Additionally, the Governor appeared to exclude public safety personnel from future pension reform efforts pursued by the Administration.

Here are the key provisions quoted from the Governor’s speech that affect local governments:

Local Revenue Reductions

Governor Rauner is proposing that Local Government Distributive Fund (LGDF) revenue be reduced by 50 percent. LGDF is shared state income tax money. Municipalities presently receive 8 percent of total state income tax collections. From the speech:

“While the state tightens its belt, so too must local governments and transportation agencies.

“The amount of money transferred to local governments has grown 42 percent over the past decade. The state currently transfers $6 billion every year to local governments. Those governments are currently sitting on more than $15 billion in cash reserves. 

“The reduction in local government sharing in this budget is equal to just 3 percent of their total revenue.

“Along with this modest cutback, our turnaround reforms will reduce unfunded mandates, and give local governments and voters the tools to save hundreds of millions of dollars through consolidation, employment flexibility and compensation restructuring.”

Transportation Spending Reductions

“Similarly, waste and inefficiency can be cut from the complex web that comprises our public transportation structure.

“Statewide, our public transportation agencies spend billions of taxpayer dollars.

“Our budget reductions for the state’s largest transit agency amount to less than 5 percent of its overall budget, and here, too, the proposals in our turnaround agenda give our transportation entities the tools to save hundreds of millions of dollars.”

Pension Reform

The Governor proposed enrolling active government employees into Tier 2 with respect to their future pension service accruals.

“Our top priority for financial reform must be our pension system. That is true regardless of the Supreme Court’s decision on SB 1. 

“Even if our pension systems were fully-funded, taxpayers would still be on the hook for $2 billion. 

“But our pension systems are not fully-funded. They are $111 billion in the hole – the worst pension crisis in America. 

“As it stands right now, one out of every four dollars taken from taxpayers by the state goes into a system that is giving more than eleven thousand government retirees tax-free, six figure pensions worth as much as, in one case, $450,000 per year.”

“The Governor also identified public safety employees as deserving of special consideration.

“But moving forward, all future work will be under the Tier 2 pension plan, except for our police and firefighters. 

“Those who put their lives on the line in service to our state deserve to be treated differently, and I believe the public will stand with me in this single case of special treatment.”  

Illinos Municipal League Reaction

Quite obviously, the IML has always been, and remains, a strong advocate for state-shared municipal revenues.

We intend to work with the Administration and General Assembly with the goal of protecting this vital source of municipal revenue.

In advance of the Budget Address, IML Executive Director Brad Cole sent a letter to the Governor and members of the General Assembly to emphasize the importance of LGDF revenue to local communities. Aninformational document about LGDF accompanied this letter.

A statement by Executive Director Brad Cole on the Governor’s Budget Proposal can be read here.

The full text of the Governor’s Budget Address can be read here.

To calculate what a 50 percent LGDF reduction would mean to your community, multiply your population by $99 (estimated Municipal Fiscal Year 2016 per capita distribution) and divide that number in half. Please make your state legislators aware of the proposed loss with an emphasis on how it would impact your operations and service levels.


Income Tax Revenue Sharing Loss Would Cost McHenry County Governments $16.9 Million — 24 Comments

  1. How about a 100% reduction in sharing with local government?

    Local government should be funded by local taxes and state government by state taxes.

    Sharing is immoral because it encourages wasteful spending at the local level.

  2. To put this into perspective, the County Conservation District’s expenditures this year were about $25 million.

    So, Rauner’s proposed cuts are about 2/3 of the Conservation District, which every sane person agrees is a stupid waste of money.

    I’m sure we’ll survive.

  3. What is the IML’s solution?

    Raise taxes no doubt.

    There will certainly some towns that will have to make cuts but it sounds like many will have to dip into their surplus funds.

    Waa waaa

  4. anyone who thinks the Madigan crew will let this go is deceiving themselves.

  5. Because we are unable to defend ourselves against spending-beyond-means by local taxing bodies, we need a bigger bully to defend us.

    This action may accomplish the task of forcing spending restraints onto local taxing bodies,

  6. @Jim: “Maybe we could cut back on bike paths.”

    Any guess on how much money the 2040 plan calls for to construct bike paths in McHenry County???

    This is something I voted against every time it was brought up.

    Unfortunately it passed.

    Take a wild guess how much is planned to be spent between 2015 and 2040?



  7. These local yokel politicians love spending money raised by someone else.

    Get your wives, girlfriends, and idiot kids off the government dole and there will be plenty of money for “essential services”, which bike paths and PR spokesmen are not.

  8. “The Wall Street Journal reports State payments to local governments has increased 42% the last 10 years.” Wish I got that kind of increase in my job!

  9. I have one question.

    If these yokel politicians love spending money while they call themselves conservative republicans why are you electing them?

    Why is the City of McHenry a joke with all the businesses it lost even though the Republicans say they are pro business.

    I have lived in McHenry county for 37 years.

    A tollroad was supposed to be built, but it wasn’t because people wanted the small town atmosphere.

    We still cut down beautiful farms which would have attracted people here for the rural life to build a Walmart which left McHenry, a Target which left McHenry, dominicks, etc.

    We look like a third world country.

    Taxes do not have to be raised because McHenry County has overtaxedus since 2002 and has a big surplus.

    Now is the time to freeze property taxes and use the money.

    Now is the time to attract out of town businesses.

    In McHenry we need a show so people would come here from Southern Wisconsin and further west of McHenry.

    The mall where Target used to be or where Sears moved out would make a fine theatre.

    We need to attract an AMC or major theatre that can afford to buy their own projector and movies.

    Restaurants and stores would build up as more people come here for the show.

    Now those who voted for Rauner you get what you wanted.

    I predict hie will cut funds but won’t freeze property taxes which will all revert to us including those that voted for him, and you won’t be able to blame Obama or Quinn even though in your stupidity you still will all for party politics.

  10. We citizens would have about 1 1/2 year to garner 290,000 petition signatures (8% of votes cast for Governor) in order to get a referendum on a ballot for Constitutional Amendment to freeze property tax rates at some percentage.

    2 1/2 percent of property value has been suggested. California has 1% maximum property tax cap. When property tax caps are enacted, property VALUES tend to rise. When property VALUES rise, tax collections can rise.

    No taxing body will ‘live within its means’ if ‘its means’ are not scrupulously defined and enforced.

    Therefore, a limiting reagent on the amount of ‘means’ available to be spent (such as a max-tax-rate as a function of property value) seems to be the only method available to taxpayers as self-defense against tax-spenders.

  11. Susan: Re: “No taxing body will ‘live within its means’ if ‘its means’ are not scrupulously defined and enforced.”

    You may want to check out the following Townships: Alden, Hartland, Dunham, Riley, Coral, Hebron and Seneca.

    There are units of government living within their means.

    It depends on the character of the people who run for office. If you have dummies running for office you get dummy representation.

    If you have honest citizens running you get honest representation.

    McHenry County Board is a classic example.

    The vote for who sits on the Ethics Board, says it all.

    Watch this full clip.

    The vote is at the end.

  12. You are correct.

    I retract and apologize.

    I would amend the word “No (taxing body will live within its means) to read “Few taxing bodies will live within their means…”

    I live in Seneca and agree that they operate frugally and with honor.

    Having watched the Youtube clip you posted, and agreeing with the observations of Mr. Alger (and paying escalating tax levies all these years of property value decline), I do not think that the County Board majority can be similarly described.

  13. Here’s my comment on another post about systems of government, and philosophy about changing the system so we do not have to rely on the honor of its human operators:

    A systemic problem can’t be solved by appeals to human honor.

    If it is ‘legal’, it will occur.

    Apply a stress test to this particular problem.

    If all elected officials in a position to influence hiring were to engage in nepotism, would the system collapse?

    Second order effects of nepotism may include incompetent performance in the job.

    Will the system collapse due to incompetence?

    Another second order effect will be perpetuation of hiring without regard to skills requirements.

    So, in a short period of time, the system (government) in question is saturated with potentially incompetent human operators.

    How much damage does ‘the system’ allow incompetent human operators to inflict on those humans governed by, but not privy to insider-only advantages of, ‘the system’?

    Apply the stress test (if all systemic components exercise maximum use of particular policy, will system collapse?).

    Then analyze whether we should be comfortable within a system so vulnerable to debasement, if it holds such an amount of destructive power over outside-the-system humans.

    My conclusion is that when systemic debasement is inevitable, the rational response, in self defense, is to seek methods for minimizing the power of the system to exert personal impact.

  14. We citizens would have about 1 1/2 year to garner 290,000 petition signatures (8% of votes cast for Governor) in order to get a referendum on a ballot for Constitutional Amendment to freeze property tax rates at some percentage.

    2 1/2 percent of property value has been suggested.

    California has 1% maximum property tax cap.

    When property tax caps are enacted, property VALUES tend to rise.

    When property VALUES rise, tax collections can rise.

    If the integrity of human operators in a system can’t be upheld, then at least we can attempt to limit the amount of damage they can inflict on us ‘outsiders’.

  15. The problem is Susan, take away the property tax and the County Board will simply apply a sales tax or some other source of revenue.

    Just look at recent CMAP meeting minutes.

    The primary topic at CMAP and MCCOG is “How do we increase our revenue stream”.

    If the voters are only given dummies and sleazeballs to vote for, you will continue to have dumb sleazy units of government.

  16. The local and state governments will finally execute what the rest of us have lived through (don’t get me started on Federal).

    Someone has to make tough decisions; cut services and cut spending.

    I doubt the decision can be made to cut “expendable” services because everything will be a sacred cow.

    A flat percentage across the board may be the only way.

    I liked Susan’s comment about us needing a bigger bully – we just may.

  17. Unlike California, Illinois does not allow binding referendums on property tax issues.

  18. Actually, the four-lane road was designed to service a race track to be owned by Marge Everett (owner of Arlington Park through the early Thompson days) in Richmond.

    It was not built because there was not enough money.

    On the initiative of Al Jourdan the freeway was designated a future tollway.

    None of the legislators representing McHenry County voted for the freeway to be turned into a tollway.

  19. Can’t a Constitutional amendment address property tax caps?

    Sure, but it has to come from the General Assembly.

    It can’t come from a citizen initiative.

  20. Everybody wants the bacon and now there’s no more bacon.

    Nobody makes their own bacon, they rely on others to make it.

    Then when one of the cogs in the machine wants out of the unsustainable system, everybody loses their mind.

    Cut stuff or raise taxes or do both.

    Your free lunch is over.

    Time to stop complaining and start figuring out.

    Get out your excel spreadsheets and start typing…

  21. My mistake. I thought there was a mechanism in Illinois for citizens to be involved in the process of deciding legislation topics.

    All right, now we know the rules of the game.

    Politically connected insiders find ways to avoid taxes (tifs, enterprise zones, abatement incentives), and political outsiders, AKA citizens, pay all the bills.

    The only rational reaction is for citizens to either reduce all taxable scenarios to minimum, or to avail themselves of the same tax loopholes and government giveaways enjoyed by political insiders.

    We might accomplish this two ways:

    1. Everyone remotely eligible for tif status should create such tax-avoidance entities. Or decrease the value of all taxable personal property in any way possible.

    2. Everyone remotely qualified for publicly-funded projects should submit bid proposals. Create a paper trail for lawsuits later as to why your bid was overlooked in favor of a politically connected inside

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