Tuesday, January 18, 2011

Tax Hike Brings No Money To Illinois Cities

By Mary J. Cristobal, Illinois Statehouse News
Illinois' income tax hike is expected to generate billions of new dollars for the state, but some Illinois mayors are upset they won’t be getting bigger slices of the pie.

Under the new plan, the state would gain more than $6 billion annually from the individual tax rate increase from 3 percent to 5 percent and the corporate rate increase from 4.8 percent to 7 percent. The increase is set to expire in four years. Illinois has a special fund that benefits local cities. In the past 15 years, cities have been receiving 10 percent of the state’s income tax revenue. But when the state income tax goes up, cities will not get a cut of the new money.

Tom Hoechst, mayor of Alton, e-mailed lawmakers before they voted on the bill to remind them that cities are part of the state revenue too. “[Illinois] is helping everyone else, why not cities?” Hoechst said. “No one is suffering worse than the cities.”

If cities were to get bigger slices as the state pie gets bigger, the local government fund would have received an extra $2.9 billion, according to a study by the Illinois Municipal League.

While some city leaders are worried about payroll and infrastructure others are concerned about losing their businesses to bordering states. Dennis Pauley, mayor of Rock Island, said his city — located on the Iowa border — will not lose any money from the state funding, but is worried that businesses would pack their bags and move next door because of the corporate income tax increase.

Hoechst has a similar situation, since Alton sits across the Mississippi River from Missouri.
“We are creating a very anti-business climate in this state,” he said.

You can read Mary's full report at: http://illinois.statehousenewsonline.com/4942/tax-hike-brings-no-money-more-problems-to-illinois-cities/


Anonymous said...

Of course, just pensions!

Anonymous said...

Illinois is becoming like a third world nation! The democrats in Springfield have no concerns about private business, only how to pad the government payroll!