Monday, nearly 50 mayors, village presidents and other municipal leaders representing nearly 4.5 million suburban Chicago residents, gathered outside the quad of Elmhurst University to call on the Illinois General Assembly to raise the Local Government Distributive Fund and roll back on a myriad of unfunded mandates passed in the last decade.
The Local Government Distributive Fund (LGDF), is a partnership between Illinois and its local governments created to distribute a portion of the state income tax, established in 1969; between 1993-2011, 10% of the total income tax collected was dedicated to the LGDF, by 2017 the rate had been reduced to 6.06%.
“For decades local government leaders knew they could rely on LGDF as a predictable and sustainable source of funding, even as other revenue fluctuated from month to month,” Palos Hills Mayor Jerry Bennett said.
Due to instability caused by the 2008 financial crisis, the state reduced LGDF income promising the reduction would be temporary, Bennett said.
Income tax represents nearly 30% of the state budget’s expected total revenue in 2024, roughly $33 billion; last year the state increased the LGDF income tax rate to 6.47%, meaning local governments could expect to split about $2.13 billion in individual and corporate income tax.
In 2025, the state of Illinois expects to bring in $109.7 billion in appropriated funds, with income tax once again representing nearly 30% of total revenue; if increased to 10% the LGDF would receive $3.29 billion, $1 billion more than the current rate.
“My community of Hazel Crest has lost over $10M in LGDF since 2011, while at the same time, we’ve faced over 1,600 unfunded mandates since I was elected in 2013,” Hazel Crest Mayor Vernard Alsberry said Monday.
As of March, 155 bills were introduced by the 103rd Illinois General Assembly that would create new unfunded mandates, according to a March 19 report by the Illinois Municipal League (IML), a government sector lobbying group representing municipal leaders.
“Unfunded mandates enacted into law cumulatively increase municipal operating costs,” Illinois Municipal League CEO Brad Cole said in the report. “As members of all political parties continue to campaign on reducing property tax costs statewide, the costs of unfunded mandates must be recognized as a direct and significant contributor to the growing property tax burden in Illinois”
To supplement the reduced income from the LGDF and increased burden of unfunded mandates, municipalities fill the gap by increasing property tax rates, Alsberry said.
In 2023 the median residential tax bill in Cook County increased by 15.7%, “the largest percentage increase in the last 30 years,” according to the county treasurer’s office.
“Each one of us here, and every other citizen in the State of Illinois, relies on the critical services provided by local governments,” Wheaton Mayor Phil Suess said Monday. “We are here this morning to reach out to our partners in the General Assembly and urge them to work with us to prioritize continued investment in our communities.”
