Title: Madigan proposes diverting local funds to pensions
Publication: The State Journal-Register
Link: http://tinyurl.com/74pxko6
Date Published: May 14, 2012
Cities and local governments are balking at a proposal released by House Speaker Michael Madigan, D-Chicago, to divert revenue that would normally go to them to the Teachers’ Retirement System. If Madigan moves the bill and is successful at passing it, it would blow multimillion dollar holes in Springfield’s city and school district budgets and hit other local government budgets by varying degrees.
Madigan’s proposal would take varying amounts of revenue from the corporate personal property replacement tax fund and use it to bolster pension funding. He introduced three amendments to House Bill 3637. One would divert about $536 million, another would divert $982 million and the third would divert $1.4 billion. The tax brings in $1.4 billion for local governments.
School districts and universities have balked at an idea by Madigan, Quinn and Senate President John Cullerton, D-Chicago, to shift the employer share of teacher and university pensions from the state to local authorities.
Money from the CPPRT currently goes to local governments, who used to be able to assess a tax on businesses’ personal property. After the 1970 Constitution was passed, the state eliminated those local taxes and instead imposed a statewide tax that it then sent some of the revenue from to the cities.
In 2012, Springfield School District received $5.8 million from the fund. The city of Springfield’s budget estimates it received $2.35 million from the fund last year, although the Illinois Municipal League pegged the number at just over $2.5 million.
“Diversions of the magnitude proposed within the amendments would be crippling to local governments,” said IML Joe McCoy.
Madigan’s proposals are scheduled for a hearing Wednesday at 2:30 in Room 114 of the Capitol.
Chris Wetterich can be reached at 788-1523.
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