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updated: 5/7/2014 8:46 AM

Agency head urges tax hike support for 'leverage'

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  • The Illinois State Capitol in Springfield.

      The Illinois State Capitol in Springfield.
    Associated Press file photo

 
 

Illinois taxpayers are set to see their income tax rate lowered at the start of next year.

But not if the leadership of the DuPage Mayors and Managers Conference has anything to say about it.

In a May 1 letter to members that was obtained by the Daily Herald, the head of the Oak Brook-based agency urges municipal leaders to support keeping the state's income tax rate at 5 percent to curry future "political capital" and possibly increase the local share of the income tax revenue.

"More active support would result in even more political leverage on (the Local Government Distributive Fund) and other current and future issues," the agency's executive director, Mark Baloga, wrote in the letter.

Baloga wrote that 13 of the 20-plus-member board of directors voted 9-4 Thursday to support continuing the 5 percent tax rate. He would not say who voted or how they voted.

Critics blasted the effort by a taxpayer-funded agency to support keeping the income tax rate at 5 percent.

"You're paying property taxes so these folks can go out and try and increase your income taxes," said Kristina Rasmussen, executive vice president of the Illinois Policy Institute, a conservative organization that tracks and analyzes government spending. "It's despicable."

Currently, a 2-percentage point increase in the state's income tax rate that was instituted in 2011 is set to end and drop the income tax rate to 3.75 percent at the start of next year.

For someone with a taxable income of $60,000 a year, that translates to a savings of $750 a year.

Baloga's letter indicates the group's support for keeping the higher tax rate would be "conditional" on increasing the share of income taxes that goes to towns and on direct deposit of that revenue into municipal coffers to end delays in state payments.

"They're trading our hard-earned money for political clout," Rasmussen said. "We hear a lot about horse trading. Rarely do we see it in writing."

Today, municipalities split 6 percent of the total income tax haul among themselves on a per capita basis of roughly $95 per person, according to analysis by the Illinois Municipal League.

If the income tax rate drops as it's supposed to, towns would not lose out on any revenue because the local share would increase to 8 percent of the total taxes collected.

The 2011 temporary tax rate increase was initially passed to help the state pay its bills and balance the budget.

Lawmakers are expected to decide whether to extend the tax increase before their May 31 budget-making deadline. State spending plans depend on how much revenue the state will be receiving.

The election-year battle over taxes has consumed the Capitol. Support or opposition of key lobbying groups can make a difference when votes are expected to be close.

Downers Grove Mayor Martin Tully was one of the four who voted against supporting continuing the 5 percent tax rate and said other local leaders struggled to "weigh in on the Springfield horse trading."

"We're in a tough spot," Tully said. "There have been overt threats made that our ... funds will be at risk if the 5 percent rate doesn't become permanent."

Burr Ridge Village President Mickey Straub said local leaders can't trust legislators to follow through with any promises because they're reneging on a promise to make the income tax hike temporary.

"They lied to begin with, and I have a hard time believing in a promise when it's attached to a threat," he said.

Naperville's city council was also expected to discuss taking a stance on the issue at Tuesday's meeting.

The issue came up after DuPage Mayors and Managers board members met with Illinois Senate President John Cullerton, a Chicago Democrat, in early April.

Baloga wrote that "since that meeting, our lobbyist has been in discussions and has conveyed ... if municipalities and municipal groups uniformly oppose or fail to support the legislation, then it is also a near-certainty that (the funds) will be eliminated or severely cut. This would be framed as cutting state expenses to help balance their budget."

Cullerton spokeswoman Rikeesha Phelon said she couldn't confirm the conversations between her boss and municipal leaders.

However, Phelon said Cullerton has said for months that mayors would see a smaller share of state income taxes if the rates don't get extended.

"That's not a threat," she said. "That's just math."

In order to cut the municipal share, new legislation would have to be passed.

"This certainly sounds to me like out-and-out extortion," said Madeleine Doubek, chief operating officer of Chicago-based Reboot Illinois, a voter-advocacy digital media group. "This just pulls back the curtain on the worst of Illinois government in action. Who, in this equation, is looking out for the taxpayers?"

Critics also noted that because income taxes are a flat 5 percent and redistribution to municipalities is based on population, taxpayers in more affluent communities in the collar counties give more money than they receive.

"We are a net donor to the state," said Naperville City Councilman Grant Wehrli, "and to a certain point we're OK with that, but to keep redistributing wealth without a solid financial plan is not the way to solve the state's fiscal problems."

Rasmussen said the income tax formula is already not a good deal for the suburbs.

"So why are these suburban mayors in favor of this?" Rasmussen asked. "To do it not for the public good, but for clout? Yuck."

Northwest Municipal Conference Executive Director Mark Fowler said his group -- which represents communities in parts of Cook, DuPage, Kane, Lake and McHenry counties -- hasn't taken a stance on the issue, but is set to discuss it at tonight's meeting.

He said members of the board have had discussions with both Cullerton and Gov. Pat Quinn about supporting the 5 percent tax rate.

Meanwhile, officials at the Illinois Municipal League, which also receives taxpayer funding from dues paid by member towns, has publicly announced its support of the tax rate's continuation, but on the condition that the local share be increased to 10 percent.

"Municipalities would get about $65 more per person or an additional $834 million to municipalities statewide," said Joe Schatteman, the league's deputy legislative director. "There's no promises that this will happen, but there is a local need for infrastructure improvements, administrative and pension needs."

But Doubek doesn't buy the argument that municipalities will be better stewards of income taxes than the state has been.

"While making the argument that local communities are doing a better, more meaningful job with the money, none of this was supposed to come to light," she said.

"The letter you have here shows this is unfortunately the way the game is played in Springfield and not being done in the light of day."

Baloga defended the letter and the sentiment, saying it was not promoting quid pro quo.

"It's a statement of political reality," he said. "We have heard again and again from our advisers that the extension is likely to happen regardless of anything DuPage Mayors and Managers does or does not do. The best way to protect or enhance those funds is to support the extension."

Got a tip?

Contact Jake at jgriffin@dailyherald.com or (847) 427-4602. Follow him at facebook.com/jakegriffin.dailyherald and at twitter.com/DHJakeGriffin.

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