Montgomery Officials Oppose Governor's Plan to Withhold State Funds

officials are joining in statewide efforts to oppose Gov. Pat Quinn’s proposal to withhold $100 million in state tax money from cities and villages.

Quinn’s plan, presented late last month, would reduce municipalities’ share of state taxes by that amount if lawmakers do not agree to borrow billions to prop up the state’s budget, something legislators have been less than willing to consider to this point.

Should Quinn go through with it, the effect could be significant on cities and villages all across the state, some of whom are already waiting on state tax payments they’re owed.

“I personally think he’s using municipalities as pawns,” said Montgomery Village President Marilyn Michelini. “He’s trying to use them as leverage to get to representatives and senators, knowing that municipalities will put pressure on the elected officials.”

Instead of that, Michelini said, she’s joined up with the Metropolitan Mayors Caucus and the MetroWest Council of Government to “coordinate a full push with the mayors” to change the governor’s mind. She said a trip to Springfield is planned to speak to Quinn’s staff and to legislators, and two rallies are in the works—one in Springfield and one in Chicago.

She’s also talked with House Minority Leader Tom Cross, and plans to speak with State Sen. Chris Lauzen and State Rep. Linda Chapa LaVia.

“This could be a fiasco if we as municipalities don’t put enough pressure on it,” Michelini said.

Finance Director Jeff Zoephel said he is not sure what the full financial impact on Montgomery would be, since he doesn’t know how much money would be withheld. The village takes in about $400,000 a month in state taxes, between sales tax ($200,000), income tax ($100,000), local use tax ($20,000), telecommunications tax ($40,000) and motor fuel tax ($40,000).

Motor fuel tax goes directly to road and bridge projects, while telecommunications tax goes into funds that help pay down the debt incurred when the village built the new police station on Route 30 and the village hall on River Street. The remaining state monies go into the general fund for operations, Zoephel said.

Montgomery has cut back in recent years, and still maintained at least a 25 percent reserve in its general fund, which could help if the state decides to suspend payments. Zoephel said the village could get through the summer on property tax revenue.

“We have the cash flow to withstand it in the short term,” Zoephel said, “depending on the length of time they chose to withhold funds.”

But in the longer term, not having access to that money could severely hamper the ability of cities and villages, including Montgomery, to provide services. State funds account for $4.8 million of Montgomery’s $23.3 million 2012 budget, and in some municipalities that level is higher.

Michelini said one worst-case scenario for some of those municipalities—not Montgomery, she emphasized—would be to eliminate their police departments entirely, and rely on county sheriffs for protection.

Zoephel said the state is already about five months behind on income tax payments—the money he expects to receive this month is December’s share of sate income tax—although other types of payments come through more regularly. But the village is not alone in waiting for the state to pay.

According to this Chicago Tribune report, State Comptroller Judy Baar Topinka believes Illinois’ pile of unpaid bills could add up to $8 billion by the end of the fiscal year, making timely payment of those bills even more difficult.

In January, lawmakers approved a 67 percent increase in personal income taxes and a 46 percent hike in corporate income taxes. But Topinka has said that money is going toward state pensions and Medicaid expenses, not paying down the backlog of bills.

In the short term, Zoephel said he is holding back on purchasing a new SUV for the police department, and outfitting it with computers. This expense was approved as part of the 2012 budget, which took effect on May 1, but Zoephel said he wants to see what happens with the state funding situation before making a move.

“We’re waiting to see how everything shakes out,” he said.