Area Officials Score Plan To Cut Income Tax Sharing

Governor Quinn won't officially release details of his proposed budget until later today but bits have been leaking out for days and his chief of staff held a briefing on it Tuesday night. The latest wrinkle revealed is a plan to cut income tax revenue sharing with cities and villages.

Jerry Stermer outlined Quinn’s proposal to plug the nearly $13 billion deficit with $2 billion in cuts and $11 million in short-term borrowing. No income tax increase is included in the spending plan but governor will ask municipalities across the state to give up $300 million in income tax revenue to help balance the budget.
"Because of the fiscal crisis, we're calling for a suspension of the current rate of 10 percent of income tax going to local governments to change to 7 percent," Stermer said.

That proposal met a cold shoulder at Algonquin where the village board was just winding up plans Tuesday  for its new fiscal year.  Village president John Schmidt said, "So now the state is saying, 'Help us out of this problem,' that we didn't create."

"In effect what they're doing to the muncipalities," said Schmidt,  "is making them kill services or raise taxes."

Village Manager Bill Ganek had a more Machiavellian analysis.  Alhough Quinn's budget doesn't call for an income tax increase now,  Ganek said cutting municipalities' share of the pie might be a way to get municipal officials on the bandwagon for one later. "If you cut sharing but then increase the income tax 50 percent you end up (from a municipal viewpoint) about the same place as you were," he said.

McHenry County State Rep. Jack Franks scored Quinn's proposed cut  in a release Tuesday. "Instead of demonstrating the fiscal discipline that is needed to solve our fiscal crisis, (Quinn's) answer is to steal money from local governments. That’s not leadership. It’s a complete lack of leadership.”

Sharing 10 percent of revenues with municipalities has been a feature in Illinois since the state first enacted an income tax in 1969.