JOLIET – Joliet officials are preparing for the possibility they will never see millions of tax dollars that belong to the city but are being held by the state.
Mayor Bob O’Dekirk told the City Council and staff on Tuesday that he wants the city to make contingency plans to avert a Joliet fiscal crisis in case the state never hands over gambling and gasoline taxes that amount to about $1.8 million a month.
Joliet and other cities have not seen any of the money since July, when Gov. Bruce Rauner declared the state did not have the authority to distribute the money without a budget.
“I hope it doesn’t come to this, but I think we should look at contingencies,” O’Dekirk said. “I’d hate to see a situation where we can’t make payroll.”
Finance Director James Ghedotte said the city staff already has stopped taking bids on street projects that rely on Motor Fuel Tax Funds, which come from the city’s share of state gasoline taxes.
Ghedotte said municipal finance directors speculate the state is holding onto money owed to cities to cover its own financial shortfall.
“The finance directors think they want to keep that money in case they run out of money to pay the bills, and then they’ll use our money,” Ghedotte said. “We’re just guessing.”
He said the speculation is that the state will run out of money to pay its bills in January.
O’Dekirk said he became increasingly concerned after seeing a video of a member of the governor’s financial team discussing reserve funds held by municipalities.
Comments made in the video, O’Dekirk said, suggest “they’re going to call on the cities to eat their reserve funds to allow the state to balance its budget.”
Reserve funds amount to savings available to pay for emergencies, unforeseen expenses and special needs. Joliet and most municipalities carry reserve funds to avoid getting into the situation the state is in.
“All the communities work their tails off and try to balance their budgets. Now they’re trying to take it away,” Councilman Larry Hug said.
Joliet had a $53 million reserve fund at the end of 2014, Ghedotte said. Of that amount, $8 million was used to balance the budget in 2015 and another $15 million was used to buy Evergreen Terrace, the low-income housing project that Joliet seized in court through eminent domain.
Ghedotte said the potential loss of gambling and fuel taxes, along with the governor’s threat to keep state income tax money that now comes to municipalities – about $7 million a year for Joliet – would lead to cuts in city services.
“We still have $30 million,” Ghedotte told the council. “We can handle the cash flow. However, if the state decides to keep our money, we are going to have to amend our budget.”