Area officials watching state budget talks wary of cuts

Marlo Guetersloh TimesNewspapers

State budget talks continue to heat up as the Illinois General Assembly heads into its last few weeks of session. 

One item on Gov. Bruce Rauner’s Turnaround Illinois Agenda is a budget proposal is whether the cities’ share of state income tax revenues will be cut in half. Area city officials say they are closely monitoring state budget negotiations to see if the cut to the local share is approved. 

In his budget address to the General Assembly in February, Rauner proposed a $600 million cut to the $1.2 billion that is the local share of income tax revenues. The cut is part of the governor’s overall plan to fix the state’s budget woes. In his budget address, Rauner argues that income tax cut represents a 2.2 percent reduction in state money going to cities. 

However, from the cities’ perspective that is a big cut to local budgets. 

For the city of Washington, the cut would be more than $750,000 to an annual operating budget of about $20 million. In Morton, it is a $825,000 cut to an operating budget of about $24 million and $1.2 million out of East Peoria’s roughly $40 million operating budget. 

East Peoria City Administrator Tom Brimberry said the hit to the city’s budget will be tougher to manage in the coming year, if the cuts are approved. 

“We do not anticipate losing or cutting anything at this point,” Brimberry said. “Next year the proposal is to cut cities much more and that may be a much greater challenge.”

The proposed cuts are something Washington Mayor Gary Manier is willing to fight against.

“I understand what the governor is trying to do and I appreciate the position he is in, but it’s not the cities’ fault that got us here,” said Washington Mayor Gary Manier. “So it’s not right for the state to solve its problems by using the cities’ money.”

If the cut to the local share of the income tax is approved, Washington will have to cover expenses out of its reserve account. While the city can cover the cut this year, Manier pointed out the importance for a city to have a reserve account.

“We were able to pay a $1.2 million bill for cleanup cost in the initial days after the tornado,” Manier said referring to the EF-4 tornado that leveled or heavily damaged more than 1,000 houses in Washington on Nov. 17, 2013. 

The state agreed in the late 1960s to share a portion of income tax 

revenue with local governments, Manier said. “That was part of the deal in implementing an income tax,” he added. 

Manier, who also serves as vice president of the board of the Illinois Municipal League, said the change to the local share of the income tax would require a change to the state’s constitution. 

“It would be difficult to make that cut, but I’ve seen stranger things happen out of Springfield,” Manier said. 

For the city of Chillicothe, the cut would be more than $350,000 to an operating budget of about $2.37 million. 

Chillicothe Mayor Doug Crew said the city’s budget for this year was created with a “conservative approach” to spending to be more flexible if the state cuts come to fruition. 

“We’re not going to have to cut what we do or lay off people or anything of that nature,” Crew said. “We’re going to be able to manage through it, but we’re going to do so very carefully.”

Long term, the cut to the local share of income tax coupled with a proposal by Rauner to freeze property tax could be a dangerous combination of local governments, Manier added. 

“If the state is going to cut funding from one side and freeze revenue on another side, it will cripple cities and school districts but also park districts and fire protection districts,” Manier said. “The cost to provide services will continue to increase for these governing bodies, but the money won’t be there to pay for it.” 

— Reporters Dylan Polk and Jeanette Kendall contributed to this story.