DeKalb County taxpayers may find relief with revenue-sharing reform
If taxpayers can get a bigger bang for their buck, they should get it.
There’s no arguing that Illinois state government must make tough decisions to put its financial house back in order.
Gov. Bruce Rauner has laid out his proposal to do that, which includes sending about $600 million less from state income-tax revenues to local governments.
“While the state tightens its belt, so too must local governments and transportation agencies,” Rauner said in his budget address.
In response, local officials hit the pavement, publicizing how much money they purportedly would lose and portraying the reduction as catastrophic. What was missing: context.
Income-tax revenue represents just one-sixth of the $6.1 billion the state gives to local governments every year. Rauner’s proposal would leave untouched the vast majority of that money.
Take DeKalb County, for example.
At the end of fiscal year 2013, DeKalb County’s municipalities and county government were sitting on $36.5 million in general-fund reserves, according to numbers from the state comptroller’s office. The proposed cut in income-tax revenue would amount to about $5.8 million countywide, or just 16 percent of reserves.
For the time being, general-fund reserves can cover the reduction. In the long run, local governments will have to pare their budgets.
This means consolidation of government agencies and services must be on the table. The state has nearly 7,000 local taxing entities, far more than any other state, even those much larger. Illinois has entities unheard of in other states – taxing districts for parks, fire protection, libraries and assorted special purposes.
In the private sector, companies routinely merge operations as a way to save money and stay competitive. Otherwise, they go out of business. This standard should apply to government as well. If taxpayers can get a bigger bang for their buck, they should get it.
Across the state, entities are finding savings by merging dispatch operations. DeKalb County and the city of DeKalb currently maintain separate 911 centers.
Neighboring Lee County combined its dispatch agencies in the 1990s and local leaders there say the consolidation was a good deal for the public.
Other opportunities for consolidation exist in DeKalb County. The city of DeKalb and the DeKalb Park District have roughly the same boundaries. Merging the two could save on administrative and overhead costs, at a minimum.
To improve efficiency, the state can help local governments by doing away with needless, unfunded mandates, particularly with pensions. Under state law, every county except Cook must belong to the Illinois Municipal Retirement Fund, or IMRF, and municipalities that join the IMRF must belong forever. They are banned from leaving.
This is unfair to taxpayers because the system is draining local governments’ ability to provide core services.
The state should instead allow communities to opt for less expensive 401(k)-style plans. Most of the private sector has already made this transition.
In 2011, the DeKalb Chronicle investigated the impact of pension costs on local governments and found it was huge. In fiscal year 2001, the Chronicle reported, the city of DeKalb spent $1.5 million on pensions. That cost rose to $4 million a decade later. Such increases can only mean property-tax hikes, cuts to core services or both.
The good news for taxpayers is that on Jan. 1, the state income-tax rate fell to 3.75 percent from 5 percent. That means a family with DeKalb County’s median household income of $53,375 will keep nearly $700 more in its pocket in 2015. That’s money the family can spend at local businesses, generating more sales-tax revenue for local government.
In short, with necessary reforms in Springfield taxpayers may actually win for a change.