State Budget Woes Cost North Shore Towns $2.2M
by Steve Sadin • October 21, 2015
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Illinois’ failure to pass a budget by June 30 has already put North Shore municipalities in nearly a $2.2 million hole that will continue to deepen until funds collected by the state and due the towns are disbursed.
Missing from current local revenue are the communities’ share of the motor fuel tax, use tax and the 911 wireless surcharge. Coupled with pending legislation that would cut the local share of the state’s income tax, some towns are rethinking their budget process.
Glenview has suffered the biggest hit. It is missing $527,974 from the three funds since June 30, according to Communications Manager Lynne Stiefel. A previous Daily North Shore story reported Wilmette is $330,000 short in funds from the state. And Northbrook is missing $369,000, according to Jeff Rowitz, the deputy village manager and chief financial officer.
Highland Park ($190,500), Lake Forest ($110,762), Lake Bluff ($61,500), Winnetka ($115,000) and Deerfield ($160,000) have all reported similar issues. Officials from Kenilworth and Glencoe have not responded to communications from Daily North Shore before this story was published.
The situation has drawn criticism of Gov. Bruce Rauner from Deerfield Mayor Harriet Rosenthal and Wilmette Village Manager Timothy Frenzer. It has also prompted state Sen. Julie Morrison (D-Deerfield) to propose legislation.
Morrison introduces legislation to force public communication
Morrison introduced a bill Oct. 21 that will require the governor, speaker of the state House of Representatives and the state Senate president along with the House and Senate minority leaders to meet for an hour a week in public to discuss possible solutions anytime the legislature does not pass a budget by June 30 or passes an incomplete plan.
“This is just common sense,” Morrison said. “I have been hearing from mayors and city councils. People are expecting funds and the state is shorting their communities. I just want to see who would vote against this bill.”
Catherine Kelly, Rauner’s press secretary, ignored the idea of a public meeting when questioned but said the governor has been getting together with legislative leaders, has offered compromises and continues trying to resolve the impasse with the General Assembly.
“The governor has repeatedly compromised on his reforms, which the majority party has blocked,” Kelly said in am email. “We urge Sen. Morrison to work with her party to pass the governor’s reforms or pass a truly balanced budget.”
Rosenthal said Rauner was trying to motivate the municipalities to use their cash reserves to make up for the money that has not been forthcoming since June 20. She said the governor floated that idea earlier in the year as part of the remedy to the state’s financial crisis.
“I believe the governor is trying to get us to use our reserves by holding all that money,” Rosenthal said. “He will say you have been able to make it and sweep those funds.”
Rauner’s office said the dollars are being held because the state lacks the authority to disburse them without a budget in place. Kelly blamed the Democrats in the legislature.
“Local municipalities are not receiving revenue from special state funds because the Democrats in the legislature passed a budget that was $4 billion out of balance,” Kelly said in the email. “The state lacks the appropriation authority to distribute revenue from those funds until the legislature passes a balanced budget, which is something only they can do.”
Lake Forest mayor worries about long term revenue reduction
Lake Forest Mayor Donald Schoenheider said he did not think Rauner had a hidden agenda by withholding the funds. He said his city was adjusting.
“They probably don’t have the authority right now,” Schoenheider said. “It’s a frustration now but it’s not something we can tolerate in the long term.”
Frenzer was also critical of Rauner’s attempt to get municipalities to use reserves. He said Wilmette will have to replace any it uses and the governor is only suggesting it because of the cash some municipalities have.
“It is a narrative that is being pushed because no one wants to admit that genuine harm is being done to municipalities.” Frenzer said. “The flaw in the logic the governor wants to place a structural reduction on our revenue and then tell us to backfill it with reserves. You can’t meet a structural change in revenue with spending out of reserves.”
The voices of the municipalities are not falling on deaf Springfield ears, according to a story in the Oct. 21 Chicago Tribune. Rauner is floating the idea of a short-term, low interest loan plan for the towns while House Speaker Michael Madigan (D-Chicago) is pushing an emergency measure to release the money.
While no North Shore community has reported it has a current, pinching problem because of the slowed payments, both Wilmette and Winnetka are planning on getting a smaller share of income tax money as they ponder their budgets.
Winnetka is planning on a 25 percent reduction in its share of income taxes, according to statements made by Interim Director of Finance Gregory Peters during a Village Council budget meeting Oct. 19. The village is short $65,000 from the motor fuel tax, $10,000 from the E911 fund and $40,000 in use taxes.
The E911 fund is money that comes to the communities from fees charged on cell phone calls to 911, according to Andrew Lichterman, Deerfield’s assistant to the village manager. Use tax is like a sales tax for services, according to Lake Forest Finance Director Elizabeth Holleb.
Wilmette watching state as it prepares annual budget
In Wilmette, the village is short $330,000 in projected revenue since June 30 because of money due from the three sources, according to Frenzer. At this point, Wilmette is looking at a balanced budget but will be watching the governor and the legislature.
“As we make our way through the budget process we will need to keep an eye on Springfield and be prepared to shift course during the fiscal year 2016 as necessity should arise,” Frenzer said.
Highland Park is missing $172,500 in motor fuel tax revenue and $18,000 in E911 money, according to Erika Robinson, the city’s deputy finance director. She said the city will assume a normal revenue stream while doing its 2016 budget and will adjust next year if necessary.
Holleb said Lake Forest’s income from the motor fuel tax is lagging $71,000, E911 $13,000 and use tax $38,462. Lake Bluff is short $61,500 from on motor fuel tax and E911 funds, according to Village Administrator Drew Irvin.
“So far we’ve been able to stay the course but we’re going to do our best to read the tea leaves,” Irvin said.
Deerfield is feeling the impact more than most, according to Lichterman. He said not only is the village down $160,000 from the motor fuel tax and E911 money, but the state is holding up $300,000 in grant money for the North Trail subdivision project replacing sewers and roads. The $2.3 million effort began in April counting on the funds.
“We don’t have the $300,000 but the bill has to be paid,” Lichterman said. “We may have to delay other projects.”
Though it is not awaiting grant money like Deerfield, Glenview’s share of delinquent collections is $527,974 with $270,000 in motor fuel tax, $87,000 in E911 and $170,794 in use tax, according to Stiefel.
Stiefel said the village is not currently at a critical point but the “State of Illinois must consider taking whatever steps are necessary to honor its obligations for the good of all taxpayers.”
Northbrook is looking at a $369,000 revenue deficit, according to Rowitz. He said the village has adequate cash flow to handle the current shortfall but the Village Board of Trustees will have to consider other options if the reductions become permanent.
