Rauner: Cut suburbs' income tax revenue in half

Gov. Bruce Rauner Wednesday proposed suburbs and downstate communities give up about half the money towns receive each year from state income taxes.

The proposal immediately sparked a chorus of local officials calling the idea a “non-starter” and saying municipalities have been “pickpocketed for years by Springfield.”

Rauner's proposal came as part of his sweeping plans for budget cuts across state government intended to rescue the state's troubled finances. He argues that many local governments are sitting on reserves that can be used and get a lot of state money from other sources, so taking away some of their income tax money is a sacrifice that has to be made.

His office says the proposed cut would be about 10 percent of the total money the state shares with local governments and that his budget doesn't include, for example, cutting the local shares of sales taxes.

“Saying no is not popular,” Rauner said.

It wasn't with suburban mayors.

“Municipalities throughout the state have been pickpocketed for years by Springfield, and now Governor Rauner's proposal to eliminate 50 percent is akin to armed robbery,” Geneva Mayor Kevin Burns said.

Rauner supported the state income tax reduction at the beginning of the year, but asking for the mayors' share would boost how much the state gets at the expense of local governments.

If Rauner cuts every towns' income tax haul in half starting in the next budget, that would add an estimated $550,816,646 to the state's coffers, according to Illinois Municipal League estimates.

The new governor touts the budget as one that doesn't rely on new taxes and says the amount the state has sent to communities over the years has continued to grow despite the state's troubles.

Mayors saw the proposal coming and have already crunched some of the numbers. For Schaumburg, that'd be a cut of about $3.5 million in the next year.

Because of the give-and-take likely to occur with the legislature, however, Schaumburg Mayor Al Larson considered it too early to start forming a plan as if Rauner's proposal was the final word.

“We have yet to sit down and discuss what our options are, but we have to wait until we find out what the final numbers are before we make any premature comment,” Larson said.

Rauner, a Winnetka Republican, also has called for a freeze on property taxes, and Democrats said it was a contradiction that the governor would try to take money away and ask them to take in less local money at the same time.

“To me, it's a logical step to think that if we're taking their money ... that their option will be to increase property taxes,” said state Sen. Melinda Bush, a Grayslake Democrat.

Republicans, though, said there would need to be pain everywhere to solve the state's deep financial problems.

“It's going to be tough medicine for a lot of groups, but it's a realistic budget,” said state Rep. Tom Morrison, a Palatine Republican. “We actually balance the budget rather than use gimmicks.”

Communities now share a pool of 8 percent of Illinois income taxes, and Rauner wants them to take 4 percent in the budget starting July 1.

Towns that get less would lose less.

“Clearly, we understand the seriousness of the state's financial problem, but the proposed 50 percent cut is a non-starter for us,” said Vernon Hills Village Manager John Kalmar, whose town would lose more than $1.2 million.

Rauner's plan will need lawmakers' approval to go forward.

His proposal is a more severe version of what's been proposed by former Gov. Pat Quinn in past years, so mayors have fought this battle before. They've won so far, tapping into the political strength of local government at the Capitol, which is inhabited by lawmakers who have close ties to local officials. Many are former mayors or former members of various local boards.

Rauner's proposal, coupled with his call for local governments to freeze property taxes, puts a number of major controversial ideas in the hands of suburban officials two months before the municipal elections.

While a $7 million loss in Naperville would require careful budget adjustments, outgoing Mayor George Pradel said cities need to help adjust to what's best for the state.

“Whoever got in office was going to have to make some drastic cuts and make some drastic changes,” Pradel said. “We have to take a good look at those and see how we can conform to what's happening to our state.”

• Daily Herald staff writers Jake Griffin, Eric Peterson, Marie Wilson, Susan Sarkauskas and Mick Zawislak contributed to this story.

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