Wilmette Could Face $1.2 Million Deficit Over State IOU's

As the start of the fiscal year nears, is among the municipalities gearing up to produce a budget. While the village presented a projected balanced budget in October 2010, it now faces a $1.2 million shortfall as the state seeks to manage its fiscal matters by possibly cutting remittances to cities and towns. 

While the state already owes the village more than $500,000, some politicians in Springfield are discussing withholding an additional $647,000.

“The state is tardy in payments they owe the village,” Village President Christopher Canning said in an e-mail to Patch.

There are issues with state payments to municipalities across Illinois, Assistant Village Manager Kathleen Gargano said in another e-mail.

“First, the state has been delinquent in its remittances to the village as well as all other local governments and its vendors,” she  said.

On April 30, the state will owe the village about $553,000, according to Gargano. While the amount is down from the nearly $1 million owed in November, the figure still presents a significant cash-flow challenge for Wilmette, she added.

However, the more significant issue at hand is discussions over reducing the Local Government Distributive Fund (LGDF), which represents Wilmette’s share of the state income tax.

Illinois deficit issue

In existence since 1969, the LGDF has provided local governments with a share of the state's income tax and is distributed based on population. Since 1995, the percentage given to municipalities has remained constant at 10 percent, Gargano said. 

"When the income tax was raised from 3 to 5 percent earlier this year, local governments did not receive any of this increase," she said.

With Illinois’ looming budget deficit projected at more than $13 billion by various organizations, the state legislature is currently debating its options. Lawmakers have discussed whether funds collected by the state--such as the motor fuel tax and state sales tax, which are normally remitted to local governments--should instead be used to pay off that debt, according to Canning.

The fund is expected to receive $1.1 billion in fiscal 2012, which is about 47 percent of the total required state transfers of $2.3 billion, according to the Institute for Illinois' Fiscal Sustainability.

“If the General Assembly passes a budget that cuts these revenues, it will have an immediate impact on the village budget,” he said.

Wilmette's action plan

Canning encourages residents to contact their legislators and urge them to oppose measures that would shortchange their communities. Working with other mayors and village presidents throughout the region, he pledges to launch a similar campaign for Wilmette.

“I expect that I will be in Springfield from time to time to lobby personally against these cuts,” he said.

If the state does cut the village’s share of the tax revenues, Canning said, the board of trustees would try to determine what expenses could be cut.

“The village has made many cuts already in reaction to the Great Recession, so I am not certain there are expenses, which may be cut,” he said about the effects of the economic downturn.

The review could include an analysis of potential service reductions, fee increases and property tax increases, depending on the extent of the state’s actions, Canning said.

“While we applaud the General Assembly for attempting to get their financial house in order,” Canning said. “It should not be done at the expense of local taxpayers.”

Stay tuned for Patch's May series on how Illinois' state budget decisions will affect the Village of Wilmette.