State of Illinois Fiscal Year 2014/15 Budget Fix

The State of Illinois recently adopted a budget “fix” to fund services that would have been cut this year if the State had not taken any action. The State took certain money, designated to specific services, and moved it to fund other services (referred to as a “sweep”).  Some of the sweeps affected revenues that the State shares with local governments.

The Governor and legislative leaders said the budget fix is a one-time measure pending decisions
on long-term changes to the State’s budget. This post describes the impact of the State’s decision
on the City’s finances.  The Illinois Municipal League (IML) provided information on the sweeps, and the Finance Department assessed their impact on the City’s finances follows:

  • The Motor Fuel Tax Fund sweep was $50M.  The State will reduce the City’s per capita share of the March 2015 revenues by $97,266.  Staff has taken this reduction into account in the Capital Improvements Plan update that staff will propose to Council in early May.
  • The Personal Property Tax Replacement Fund sweep was $14,114,300, reducing the City’s share slightly less than $10K.

The State swept other funds as well. At this time, the effect of the sweeps on the City’s revenues, if any, are uncertain. These sweeps are described as follows:

  • The State collects Sales and Use Taxes from businesses and individuals and remits a portion of the revenue to local governments. The State swept a combined $240 million from the funds that account for the local governments’ share of the revenue. Since there is already a delay in payment to the local governments, the Illinois Department of Revenue (IDOR) stated it could manage the funds to minimize or avert any reduction in the amount transferred to local governments.
  • The Wireless Service Emergency Fund was swept by $7.5M.  Similar to the Sales and Use Tax sweeps, the sweeps may not affect METCAD’s monthly distributions.  However, the sweep may impair METCAD’s ability to receive Federal grants because the level of State funding is factored in the grant requirements.

As the State of Illinois releases more information on the FY15 Budget Fix and on the State’s budget for FY2015/16, Finance staff will continue assess the impact on the City’s revenues.