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Home rule, no financial panacea for struggling Illinois municipalities

A four part survey by Northern Illinois University’s Center for Governmental Studies found that several significant changes occurred in home rule municipalities between 1986 and 2002.

First and foremost, there was a very significant increase in the use of home rule taxing powers. Additional retail sales taxes were increased in 61% of the home rule cities, and property tax statutory limits were exceeded by two in five home rule municipalities.

The study concluded that, “Clearly, taxation has become a major use of municipal home rule powers during the past 20 years,” and that was 15 years ago.

Many municipalities, after decades of home rule, are still struggling with financial deficits leading to cuts in services. The state exempted local public pensions from home rule statutes, thereby removing Rockford’s and other municipalities’ foremost escalating operating expense – so much for self-determination of our local affairs by reducing Springfield’s control.

The state has also started to charge an administrative fee to collect all sales taxes and has reduced funding around the state, resulting in higher home rule “total taxes” for these municipalities primarily to reduce deficits, not to enhance economic development.

One of the worst examples of a municipality after 41 years of home rule is Danville, Illinois. The city council just voted to raise 2018 property taxes 10 percent and hike the city’s public safety pension fee to $267 up from the current $96 on property under 5,000 square feet, a 178 percent increase according to the Policy Institute.

The officials of Danville have formulated, under home rule, a public safety fee, in addition to property tax increases, specifically for public safety pensions.

So, Danville is enacting a property tax and fee hike as part of a 22-year plan to address their underfunded pension liability. The long-term strategy calls for gradually increasing taxes and fees on homeowners and businesses until 2040!

Under the plan, pension fees and property taxes will increase 10 percent in the first two years, 9 percent in the third year and 4 percent in the fourth year, followed by 3 percent increases in each of the subsequent 18 years – home rule in action today in Illinois.

Hoffman Estates plans in 2018 to raise their property tax levy 4.9 percent and making a 1.2 percent cut to the village’s budgeted revenues, in addition to a 1.7 percent spending cut in the total net operating and capital budget from fiscal year 2017 according to the Daily Herald.

Hoffman Estates officials also blamed their sales tax revenue, which is also decreasing due to cuts in consumer spending, while also struggling under the weight of growing costs for retirement benefits.

Belleville, another home rule city, is considering a property tax levy of almost 12 percent this past week with most of the new funding going toward pensions.

The proposed property tax levy increase is more than twice as high as the 4.67 percent levy increase passed unanimously by the Belleville City Council just two short years ago in December 2016.

From 2012 to 2016, taxpayer contributions to Belleville’s fire pension fund rose by more than 34 percent, according to the Illinois Department of Insurance’s 2017 Biennial Report.

Another city, Elgin, is also having difficulty living within its means despite being a home rule city since April 19, 1977 and needs to consider more taxes at its city council meeting for 2018.

A budget proposal before the Elgin City Council would mean higher property tax bills, a new 4-cents-per-gallon gasoline tax, a sales tax hike, and gradual increases in Elgin water and sewer rates through 2022 that would add up to a 42 percent hike over that time, according to the Daily Herald.

Naperville and DeKalb, both home rule cities by virtue of having a population of 25,000 or more, also have financial issues involving possible increases in their home rule sales taxes and motor fuel taxes and cuts to the general fund while providing fewer services.

Naperville has also increased their pension plans by 37% from 2016 to 2018.

Rockford has a 2018 deficit of $10.2 million, being compounded by the state’s unfunded mandates, fees and home rule exemptions for pension costs.

Rockford will undoubtedly pay off their deficit and their future deficits by raising our “total taxes,” regardless of which of the “diverse revenue streams” they chose under home rule and without any voter input.

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6 Comments

  1. Mr.Biondo – I am not a big fan of home rule for the facts you just stated. Can there be a hybrid plan of home rule and best of PTELL which is the max of 5% of 1/2 of inflation whichever is less and eliminating the disastrous downside of PTELL in declining property values whereby you can raise more than the 5%. P.S. have you checked out Wirepoints.com by Mark Glennon. (all Illinois news on 1 page). You will need a lot of B.P. Meds when you read that.!!! Thanks

    • Ted Biondo

      Fred, the Illinois Supreme Court has ruled that any Home Rule city council and mayor can do what you suggest, but that any future city administration can revoke that and go to home rule at any time without voter approval – and it takes four years to remove these people from office and the damage is already bee done.

      I will write future articles concerning the unlimited borrowing power home rule cities have and it the most frightening of all because bonds are for periods of decades!

    • Ted Biondo

      Unfortunately the Illinois supreme court ruled that once home rule is passed the current mayor and council can promise anything but a future administrations can change it all without voter approval!

  2. Ted – Thank You. Could you look into an article I found. From the Chicago Tribune entitled Towns Borrow,You Pay September 9,2012. It is about towns like Bellwood and Bridgeview who are under home rule and borrowed $134,000,000 for a soccer stadium without voter approval and are now drowning in debt. The article states town after town who are in a huge financial mess. I will try to send you the link if you can not find it. Thanks and Merry Christmas and Happy New Year to you and your family.

    • Ted Biondo

      Thanks Fred, I not only have read the article but have included it in my slides that I have presented against home rule in three locations with the mayor and I debating the issue!

  3. Mr.Biondo, I have a few questions about home rule. Number 1. If home rule is passed what happens to PTELL. I thought the abolishment of ptell would have to be on a referendum or do we have both. Number 2. The rules for having a home rule city have changed since Rockford last had home rule. In the new budget that just passed that in the event of bankruptcy Muni bond holders have ultimate precedence even over pensioners and everyone else to get their money first. Home rule communities can not make any law that overides this provision. Jeanne Ives brought this up that this was hidden in the budget.SB0042 (65 ILCS 5/Art.8 Div.13)and (65 ILCS 5/8-13-20) explains home rule. Could you look into this. Thanks and Be Well!

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