Potential change in income tax disbursements could help local government cash flow

Posted: May. 11, 2013 8:57 pm Updated: Jun. 1, 2013 10:15 pm

By MATT HOPFHerald-Whig Staff Writer

Legislation approved by the Illinois House could help area communities get shared income tax revenues at a faster pace.

The legislation would require that the state immediately deposit income tax money for communities into the Local Government Distributive Fund instead of the state's general fund. The money would then be disbursed to communities.

Local officials believe the bill could potentially help with cash flow.

Quincy Treasurer Peggy Crim said it could help.

"I'm all for getting the money into our bank accounts as soon as fast as we can," Crim said. "It's one of those things that I'll believe it when I see it."

Crim said the state is usually three or four months behind in income tax benefits.

"Most of the time our stuff comes in on time except for the income tax, and I think that's mainly because they don't have the cash flow to pay it," she said.

The city of Quincy budgeted for $3.85 million from the state's income tax, while Adams County budgeted for $1.81 million.

County Board member John Heidbreder, R-4, who serves on the Finance Committee, said no one would complain if the income tax dollars were immediately dispersed.

He said it has been difficult in recent years to receive prompt payments from the state, and the county doesn't know what the state will pay month to month.

At one point last year, the county was considering taking out a short-term loan to help with cash flow before property tax reimbursements came in.

Municipalities and counties receive 6 percent of total state tax income tax revenues. Communities received 10 percent of income tax revenues until the 2011 income tax increase was approved.

Joe Schatteman, deputy legislative director of the Illinois Municipal League, said communities are owed about $200 million from the state, which was previously around $350 million.

"The state is catching up on their bills a little bit," he said. "Where it will benefit is municipalities will have the additional cash and basically won't be writing a free loan to the state (for money) they need for their own use."

House Bill 961 was overwhelmingly approved last month by the House, but it remains in the Senate Assignments Committee.

Schatteman said it will be difficult for the bill to be approved. The deadline to pass bills out of committees was Friday. However, the Illinois Municipal League will keep urging lawmakers to approve it.

"We'll try to do anything we can to get this legislation through, whether it's this bill or another bill or we get to put language on a different bill," Schatteman said.

He said some communities had to get a short-term loan to make payroll because the state was behind.

"I know there have been times when municipalities weren't sure whether they were going to get a check from the state or when that check was going to come," Schatteman said. "That has caused major cash flow problems with some of our communities."