From The Center Square: A new Illinois Policy Institute analysis estimates local governments have lost $10.9 billion since 2012 due to reduced state revenue sharing, prompting pushback from a state lawmaker.
The change stems from a decision more than a decade ago to lower the Local Government Distributive Fund, or LGDF, from 10% of state income tax revenues to less than 7%, a move that continues to squeeze city and town budgets statewide, according to state Rep. Steve Reick, R-Woodstock.
“It goes back to a deal made when Illinois adopted the income tax,” said Reick. “Local governments agreed not to impose their own income taxes in exchange for a guaranteed share of state revenue. When the state changed the percentage in 2012, municipalities were pushed to the back of the bus.”
Illinois Policy author Patrick Andriesen said the 2012 reduction was initially framed as temporary during a budget crisis under then-Gov. Pat Quinn, but the funding was never restored.
“The understanding at the time was that once the state got out of that tight spot, the share would go back to 10%,” Andriesen said.
According to the analysis, returning LGDF to 10% in 2024 alone would have sent roughly $1.17 billion more to municipalities. Instead, many local governments have turned to higher property taxes, fees and borrowing to cover basic services, according to Andriesen.
“The state took away revenue, then handed local governments the political heat,” Reick said. “People don’t yell at Springfield officials at the grocery store. They yell at their mayor.”
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