JOLIET – The new Illinois budget includes a cut in what local government gets from the state income tax and initiates a new fee for tax collection services.
The 10 percent reduction in what officially is called the Local Government Distributive Fund has been up for discussion since the state budget stalemate began.
It could mean $1.4 million a year in less revenue for Joliet and $900,000 a year for Will County – but not necessarily.
"All the municipalities are trying to figure this out," Joliet Interim City Manager Marty Shanahan said.
What is making the cut not so simple is that the state also is speeding up delivery of the money, which usually lags behind a couple of months.
"Instead of doing 12 payments, they're going to do 14 payments," said Nick Palmer, chief of staff for the Will County Executive office. "It seems like we're almost going to end up a little ahead this year, which doesn't make sense."
It may make sense, if the cut continues next year, meaning ultimately cities and counties will get less money from the state.
Joliet Mayor Bob O'Dekirk sounded skeptical when he discussed the matter at a city council meeting last week.
"The way it's being presented, I think, is a little bit of funny money," he said.
The plan for now, O'Dekirk said, is for the money to be restored to local government next year. But, he added, "You can't really guarantee that's going to happen."
A cut in the Local Government Distributive Fund, which also includes money from the state corporate property replacement tax, has been talked about since 2015. Two years ago, Gov. Bruce Rauner talked about cutting it by 50 percent.
"It's a sizable dollar amount," said Hugh O'Hara, executive director of the Will County Governmental League. "It's always a target for the state to take funds from."
Sales tax fee
Meanwhile, the budget also includes a 2 percent sales tax administration fee that will be charged to local governments.
The state collects sales taxes and then distributes local portions to cities and villages. Now, it's going to charge for the service.
Joliet anticipates collecting nearly $22 million this year from its share of the state sales tax and almost $25 million for the local sales tax it collects as a home rule community.
Will the fee apply to home rule sales taxes as well?
"That's one of the things we're trying to figure out," O'Hara said.