Tag Archives: funding

Funding local services via property taxes or state funds

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What should be the formula by which local governments and the state of Illinois contribute monies for local services? There might be change coming:

Photo by KATRIN BOLOVTSOVA on Pexels.com

The concern centers on the Local Government Distributive Fund, the long-standing revenue-sharing mechanism that sends a portion of state income tax collections to cities and towns across Illinois.

Illinois mayors are warning that Pritzker’s proposed fiscal year 2027 budget plan reduces the share of state income-tax revenue distributed to local governments, a shift that would force many municipalities to make tough choices.

The proposal would lower the municipal share of income tax revenue distributed through the fund from 6.47% to 6.23%, meaning cities and villages would receive about $60 million less than they would under the current formula. Lawmakers have reduced that share significantly over the years, starting with a substantial cut from the 10% level that persisted prior to 2011 when lawmakers significantly increased the income tax.

While the change would send more money to the state, it would squeeze local governments that rely heavily on property taxes to fund services. Pulling additional dollars from the LGDF risks shifting the burden onto Illinois homeowners, who already face some of the highest property tax bills in the country. Property taxes are set locally, but state decisions about revenue sharing inevitably shape how much local governments must rely on them. 

Several matters appear to be at play:

  1. Local residents and leaders tend to like more local oversight of government and funds. But they are not necessarily opposed to getting funds from elsewhere – like the state – to then spend locally.
  2. Who should be making “tough choices”? Let’s say the formula is reconfigured; what local services are at risk for Illinois communities? Or where is that extra money the state is keeping then being spent? Would that money be spent in ways that helps lot of people?
  3. Property taxes are a hot button issue in many places. People like their property values going up but they do not like their property taxes going up along with that. And property taxes pay for the local services that help support their property values (schools, local amenities, etc.). If people don’t want property taxes to keep going up, what would local communities actually cut or scale back?

Percentage-wise, the formula change seems small but this gets at a fundamental issue in the American political and social system: there are multiple layers of government that provide for residents. Americans tend to like local control but townships, counties, states, and the federal government also provide services. The optimal distribution of funding and services is up for negotiation and the debate grows stronger when there is less money to go around.

Still looking for money to solve Chicago freight rail traffic congestion

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Illinois politicians can occasionally work together: they are still searching for funds to tackle freight rail congestion.

In an unusual display of local bipartisan unity, 13 of Illinois’ 18 U.S. House members have signed a letter urging that any new federal transportation bill include guaranteed funding to decongest the Chicago area’s crowded freight rail network.

The letter, sent to the chairman and ranking member of the Committee on Transportation and Infrastructure, comes at a critical time, as Congress shows signs of both finally producing a long-term funding bill and remaining stuck in a stalemate that has persisted for most of a decade…

But key rail hubs including Chicago received inadequate funding in prior bills, the letter says. To alleviate that, not only is a dedicated funding stream needed, but spending should focus on metropolitan areas, include access to multimodal facilities and allow for a competitive grant program for “complex mega-projects that have significant national and regional economic and quality of life benefits.”

That appears to be a reference to this area’s Create program, which has been only partially funded.

The funding shortfall continues even as the Chicago region handles a lot of train traffic. This has both local effects (blocked crossings) and national consequences (delayed freight traffic). However, the problem doesn’t get much attention: the freight traffic is distributed across railroad lines and facilities, the public doesn’t know much about it (outside of seeing block crossings as a nuisance) or doesn’t see it (intermodal facilities are big but often hidden), and a variety of levels of government aren’t exactly rolling in a lot of money to be spent on infrastructure (and there are other infrastructure matters requiring attention as well).

At what point would it be reasonable to ask the rail companies to fund some of these needed improvements? While this is important and costly infrastructure, couldn’t money be saved if someone acted sooner rather than later?

Another consequence of financial crunch: public housing repairs

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The New York Times reports that public housing repairs have fallen even more behind due to the financial crunch affecting many governmental bodies: “Public housing is falling apart around the country, as federal money has been unable to keep up with the repair needs of buildings more than half a century old.”

While the story goes on to address particular cases in Baltimore and New York City, it’s hard to know from the story about how much of an issue this is. How much worse is the issue compared to five years ago? The only figure cited about a national figure for repairs was derived from a 1998 study. In Chicago over the last few decades, public housing repairs were frequently behind and more funding was requested even when economic times were good.