SPRINGFIELD - House Speaker Mike Madigan is telling reporters now that the 2011 temporary income tax will not become permanent - and his "working groups" are preparing a "middle-of-the-road" budget for FY 2015. If that's true, it's a huge victory for taxpayers and anti-tax groups - as well as individuals that stood against the powers-that-be in Springfield.
As recent as early May, members of the DuPage Mayors and Managers Conference were told that they may as well support making the 2011 67 percent state income tax hike permanent, because it was "almost certain to pass regardless of municipal support, opposition, or neutrality." They were also told if they didn't support the tax hike and it failed, they would see a substantial cut in their state subsidies - even lose it altogether.
That would be a substantial budget hit for villages like Hinsdale - $1.6 million a year. Still the "quid pro quo" approach to getting the tax hike extension didn't set well with mayors who live in the same neighborhoods as their constituents and who are faced every day with reprecussions for their budget decisions.
“In short,” Cauley told the Hinsdale Doings, “leaders in Springfield are threatening local governments that if they don’t actively support the income tax increase, their share of the state income tax will be eliminated.”
And although losing the tax hike could cost his city $1 million annually, Burr Ridge Mayor Mickey Straub didn't take well to the report DMMC Executive Director Mark Baloga sent out saying the group's board had voted to support the tax hike extension. Soon after Straub sent feedback to Baloga that was shared with the other members of the DuPage mayors group, the DMMC backtracked and decided to remain neutral on the tax hike.
"If DuPage County mayors do lead the charge, or should I say 'fall-in-line', and we turn our backs away from a fundamental county principle of 'lower taxes,' what guarantees do we have that it will be upheld?" Straub asked his colleagues. "And do we really think that when 'push comes to shove' that Mr. Cullerton, or one of his colleagues in the future, will put our interests in front of their own, that of supporting their special interests in the future?
"I know that I am relatively new to this, but it seems to me that we would be trading a temporary promise for a permanent tax increase, and it is a question of 'To Flinch or not to Flinch?' Do we really think that the Democratic Party will put village demands in front of union demands? I think not."
Combined with the mayors resisting the pressure from Senate President John Cullerton and House Speaker Mike Madigan, support for the tax hike extension began to erode as anti-tax groups like Illinois Policy Institute and Americans for Prosperity-Illinois turned up the heat with ads and robo calls into Democrats' districts.
Madigan now says in the last week of spring session, a tax hike extension is off the table, and the Democrats will be working to come up with a budget with the funds expected in FY 2015.
DuPage Mayors and Managers Conference email from Mark Baloga, sent out May 2, 2014:
To: DMMC Mayors/Presidents
After extensive deliberation, the DuPage Mayors and Managers Conference Board of Directors took action today on an issue of great significance to our members, approving conditional support of continuing the 5% state income tax rate. As we follow through on this action, it is important the Board has input from all member municipalities. Please read this email in its entirety, share the information with your municipality’s elected officials, and provide feedback to DMMC as soon as possible.
You likely have seen recent news reports of Governor Quinn and Legislative Leaders discussing the opportunity for local governments to secure, or even increase, the local share of state income tax (aka “LGDF”) if the current 5% income tax rate is extended beyond its current sunset date of 2015. Senate President Cullerton directly addressed this topic with DMMC members on April 9 during our Springfield Drive Down. Since that meeting, our lobbyist has been in discussions with legislators and has conveyed the following:
1. Extension of the 5% income tax is almost certain to pass regardless of municipal support, opposition, or neutrality.
2. If municipalities and municipal groups uniformly oppose or fail to support the legislation, then it is also a near certainty that LGDF will be eliminated or severely cut. This would be framed as cutting state expenses to help balance their budget.
3. If municipalities and municipal groups such as DMMC support the tax rate extension, this could secure an increase in the local share of income tax and direct deposit of LGDF revenue—both long-standing DMMC legislative priorities.
4. Support for the tax rate extension would generate ongoing political capital for DMMC, other municipal groups, and municipalities themselves.
5. “Support” can range from a simple statement of organizational support, to individual mayors actively supporting the legislation and the legislators who vote for it, and anything between. More active support would result in even more political leverage on LGDF and other current and future issues.
After extensive discussion, the DMMC Legislative Committee (by unanimous consent, on April 25) and the DMMC Board of Directors (by a 9-4 vote, on May 1) approved DMMC’s conditional support for continuation of the 5% tax rate as long as the bill adequately increases the current 6% LGDF portion of income tax and provides for direct deposit of LGDF revenue to eliminate delays in payments to municipalities. The Board’s motion further specified using this opportunity to pursue additional legislative action including:
A. Stoppage of HB 5485 which would require negotiation of minimum staffing for fire departments and districts.
B. Consideration of additional legislative priorities such as expenditure authority for non-home rule hotel motel tax revenue.
C. Ability to participate actively in development of municipal public safety pension reform legislation.
Two other municipal groups—the IML Board of Directors and the South Suburban Mayors and Managers Association—have taken positions to support extension of the 5% income tax if the legislation includes an increase in the local share of income tax from 6% to 10%.
The Board of Directors approved this motion after considerable debate and consideration of many different perspectives, including the challenge for local officials to publicly support continuation of the 5% tax rate. Approval was based on the following factors:
1. Support is conditional, hinging on inclusion of provisions to benefit municipalities.
2. The tax rate will pass in any case, so it was thought best to avoid losing LGDF revenue in the process.
3. There is value in not only protecting LGDF revenue but also in putting the LGDF issue “to rest” for a period of years and avoid the need to annually fight for this local revenue.
4. The future benefits of creating political capital.
Because we will not have a full membership Conference Business Meeting until June 18 and action on this issue will take place immediately and through the end of session on May 31, we wanted to update all DMMC members as quickly as possible and ask that you share this with your elected officials and request their immediate feedback. As important as LGDF revenue is to all municipalities, maintaining the solidarity of our membership is essential, and indeed our united stance of legislative priorities is in large part the reason why we have this opportunity.
Please contact me with any questions, feedback, or concerns so that I may keep the DMMC Board informed. We will keep you updated as this issue progresses.
Thank you and best regards,
Mark Baloga, Executive Director
DuPage Mayors and Managers Conference
Response from Burr Ridge Mayor Mickey Straub sent on May 3, 2014:
Dear Mark, DMMC and Colleagues:
On the surface, it would appear to be a prudent decision to vote for a tax increase in order to protect a vital amount of money (LGDF) currently being paid to the municipalities. It would seem like a good trade-off, the easy answer, and it’s understandable why so many of my fellow mayors and village presidents would lean that way. Though personally, I find it difficult to trust a promise attached to a threat.
But let’s set that aside for now and look at the situation from an aerial view. The State of Illinois has one hundred and two (102) counties in it. What happens if DuPage County acquiesces, but one hundred and one (101) other counties don’t cave in? What if one hundred or ninety or even eighty reject Senate President John Cullerton’s offer and vote “No” to the task increase? Does he then only give the LGDF funds to the one, ten, twenty or thirty counties who gave in? I think not.
If DuPage County mayors do lead the charge, or should I say “fall- in-line”, and we turn our backs away from a fundamental county principle of “lower taxes”, what guarantees do we have that it will be upheld? And do we really think that when “push comes to shove” that Mr. Cullerton, or one of his colleagues in the future, will put our interests in front of their own, that of supporting their special interests in the future? I know that I am relatively new to this, but it seems to me that we would be trading a temporary promise for a permanent tax increase, and it is a question of “To Flinch or not to Flinch?” Do we really think that the Democratic Party will put village demands in front of union demands? I think not.
Though I may be in the minority, it appears to me that we don’t have seat at the table. What we really have is a front row seat to a potential house fire and Senator Cullerton is threatening to light a match!
The amount of LGDF revenue currently being paid to the municipalities, as assured by a previous promise or state directive I might add, just scratches the surface to offset the state debt and obligations and will do little to offset financial woes. Many have said that “Illinois does not have a revenue problem…it has a spending problem!” Though, it could be added that Illinois really has an ethics and leadership problem too, as evidenced by the threat itself.
I vote no.
Conceived in liberty,
Mayor Mickey Straub
Village of Burr Ridge