Gov. Jim Edgar`s call for the end of the state sharing income tax surcharge revenues with municipal governments in Illinois was received by Du Page officials much like the way news of a death of a relative after a long illness is received.
The proposal to make the surcharge permanent, and put all the funds in state coffers, means a potential cumulative loss of about $22.5 million to Du Page municipalities beginning July 1, assuming the legislature approves Edgar`s budget plan as he presented it Tuesday.
Those cities and villages currently share in the income tax surcharge receipts to the tune of about $15 million, which according to Lynn Montei, executive director of the Du Page Mayors and Managers Conference, ”has amounted to 2.5 or 3 percent of municipal budgets.”
”It`s bad news,” she said, ”and we will be feeling it.”
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Edgar`s surcharge proposal was among several other austerity measures proposed in his 1993 budget. The budget also would cut welfare benefits, impose fees for state parks, boost taxes on some alcohol and tobacco products and cut state employment.
In Naperville, finance director Julia Karr said the governor`s surcharge plan would amount to a $1.3 million revenue loss for the area`s third largest city.
A hearing on Naperville`s budget, which Karr described as ”very lean . . . without any fat at all” was scheduled for Tuesday night.
”I would consider that (cut) significant to us in the sense that generally state revenues are looked upon as a stable source of revenue. I guess in the past, they were. You can`t always count on them now,” said Karr. He predicted Naperville will have to consider raising fees for various city services if Edgar`s proposal is approved.
Shocking as the Edgar plan may be, it shouldn`t have taken Du Page municipalities by surprise, according to Montei.
”We weren`t surprised by his announcement and have been forewarning our members that (the surcharge distribution) was definitely a target and could be in jeopardy because of the state`s financial circumstances,” said Montei.
”It only goes to show that we and the state are very closely linked,”
she said. ”Our financial woes are linked to the state`s woes, including our property tax problem. With the income tax surcharge to local governments eliminated, Du Page property taxpayers will not see those revenues coming back to this county.”
If it is adopted by the legislature, Edgar`s proposal ”equates to service cuts,” Montei said, despite her claim that very few Du Page municipalities used the surcharge funds to shore up their operating budgets.
The Edgar plan also appears to shift the tax burden, according to Montei. ”The same people are going to have to make up the difference in what state funds don`t handle. Local property taxes or some other locally generated revenue source is going to have to make it up,” she said.
However, that kind of effort would be hampered in all but home rule units of government by the tax cap on the collar counties.