Last week I attended several meetings including the Metropolitan Mayor’s Caucus. At that meeting, the new Mayor of Chicago, Lori Lightfoot, was given an opportunity to address all the mayors in attendance.
I commend Mayor Lightfoot on her willingness to speak out about pensions. She pointed out, what all of us know, that we must solve the pension issue and part of that fix means eliminating the 3% guaranteed compound growth rate and ensuring that the benefits are reasonable and can actually be paid. We all understand the promises that have been made, but if the system goes bankrupt trying to keep those promises, those payments will never actually happen. A good example was the pension grab here in Orland Park. If the former mayor had retained office, and the pay increase he championed went into effect, he would have received an additional $2.1 million in benefits for only $22K of additional contributions. I don’t think any reasonable person would consider that fair to taxpayers. It is immoral.
As Mayor Lightfoot pointed out, legislators don’t have the political courage to fix it. I look forward to working with Mayor Lightfoot and the other mayors to pressure state legislators to have the courage to finally resolve this issue.
We also received a briefing on Governor Pritzker’s new budget. He factors in his new progressive tax into the budget and also threatens cuts to important programs if the tax is not approved by voters in November. I reviewed his budget presentation and he proposed 25 new programs at the cost of over $635 million. He also proposes added spending of $3.55 billion on 38 existing programs. Also, I would like to point out that Governor Pritzker pushed cannabis largely to raise revenue. We have also heard about gaming and the lottery as big revenue producers. Here are the numbers from his budget:
| Revenue Source (millions) | 2020 | 2021 |
| Income Tax | 19,435 | 20,126 |
| Corporate Tax | 2,490 | 2,489 |
| Sales tax | 8,740 | 9,038 |
| TOTAL | 30,665 | 31,623 |
| Cannabis | 15 | 46 |
| Gaming | 261 | 258 |
| Lottery | 700 | 728 |
| Total | 976 | 1,032 |
In total, the sin taxes are approximately 3% of our other tax sources. The governor’s own projections indicate that cannabis is 0.1% of our normal revenue sources. There is absolutely no way these revenues will cover the social costs associated with this industry.
One of the governor’s big threats is to cut our Local Government Distributive Fund (LGDF) if the progressive tax doesn’t pass. When the state income tax was first passed this fund was 10% of all income taxes collected shared to the municipalities on a per capita basis. It was reduced in 2011 when state income taxes were increased (personal from 3 to 5% and corporate from 4.8% to 7%). Under existing law 5.76% of net individual income tax and 6.51% of corporate income tax is deposited into LGDF. However, they don’t distribute all of it. The net result is that currently, municipalities receive 5.65% rather than the 10% the state promised decades ago. Along with the proposed tax increases, these percentages will be reduced to 5.32% of individual and 6.16% of corporate income tax. IT NEVER ENDS. THE STATE TAKES YOUR MONEY ON THE FRONT END AND THE BACK END!
Additionally, the state charges us an administrative fee on sales tax collection (another new charge), and when the gas tax was doubled, they lowered the percent of the tax they share back to municipalities.
To put all of this in perspective, in Orland Park these changes cost the Village of Orland Park approximately $5.7 million annually. Imagine the good we could do with this funding!
Also, the governor stated what his new rates would be (note this could be changed by the legislature anytime if the progressive tax amendment passes):
| Public Act 101-0008 Income Tax Rates | ||
| Marginal rates | Net Income Single Filers | Net Income Joint Filers |
| 4.75% | $0 – $10,000 | $0 – $10,000 |
| 4.90% | $10,001 to $100,000 | $10,001 to $100,000 |
| 4.95% | $100,001 to $250,000 | $100,001 to $250,000 |
| 7.75% | $250,001 to $350,000 | $250,001 – $500,000 |
| 7.85% | $350,001 to $750,000 | $500,001 – $1,000,000 |
| 7.99% | Over $750,000 | Over $1,000,000 |
Note that these rates penalize married couples with two income earners. The governor will say that 95% of people will save under these rates. That’s true from the 2017 rates saving up to $65, just enough to pay for the increased fee on license plates for one car (but not enough to cover the doubling of the gas tax). How generous of him! Keep in mind that in 2011 rates were 3%. If you look at those rates you are paying quite a bit more:
| Annual Income | 2011 Taxes Paid | 2017 Taxes Paid | New Proposed Rates Taxes Paid | Savings From Governor’s Plan | Actual Cost to you Since 2011 |
| $50K | $1,500 | $2,475 | $2,435 | $40 | $935 |
| $100K | $3,000 | $4,950 | $4,885 | $65 | $1,885 |
| $250K | $7,500 | $12,375 | $12,310 | $65 | $4,875 |
I don’t like being threatened and extorted to support giving the state a blank check with our tax dollars. I will not support this progressive tax for two main reasons. The state has a spending problem not a revenue problem and the biggest part of the spending problem are pensions which THEY REFUSE to address. Second, the state cannot be trusted. Last year the LGDF to Orland Park was approximately $6.1 million. If we would have been funded fully it would have been $10.7 million. Schools are supposed to receive the majority of their funding from the state. Lottery and gaming were for education and they are all going to pensions. In our area, schools receive about 10% of their funding from the State of Illinois.
You will hear state legislators and the governor talk about property tax reform. It’s pretty simple: fix the pensions and fully fund the schools and municipalities as you have promised and those entities could reduce property taxes.
I will continue to work with my fellow mayors and the Illinois Municipal League to fight for pension reform, restore the LGDF to its promised amount, eliminate the sales tax administrative fee of 1% they charge us, and restore fully the motor fuel tax sharing.
