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Wayne’s Words: What happens locally with a new state budget?

7/6/2017, midnight
By Wayne Horne – whorne@thetimesweekly.com What do you do when you can’t afford to pay your expenses? The State of ...

By Wayne Horne – whorne@thetimesweekly.com

What do you do when you can’t afford to pay your expenses? The State of Illinois is in that position. No one is happy about it. It’s already too late to cut past expenses. The Republicans in the state legislature, along with the Democrats, arrived at a decision over the last few days and accepted the idea that has been put forth many times over the last two years: raise the state income tax rate. But that’s just a start. The Illinois senate has also agreed on the increase and the governor needs to sign it. He probably won’t. The legislature will need to override the governor’s veto. Most likely they will. In anticipation of those actions, Credit agencies are holding off making Illinois eligible for junk bond status.

Raising the tax rate is just a small part of the solution. The backlog of bills facing Illinois is over $14 billion. The state will have to borrow money to accomplish paying most of those debts. The tax increase only nets about $5 billion the next fiscal year. By the way, don’t think you have time to plan or think about the impact on your personal financial situation. If it passes the necessary legislative hurdles this week it’s retroactive to July 1, based on current language in the bill.

Putting revenues in place to pay the overdue bills is just step one. In order to put the state on a sound financial basis it is essential that all the issues that brought Illinois to this point be addressed, namely, the spending beyond taxpayers’ willingness to pay.

The focus on state-level spending ignores the problems it causes on the local level.

One aspect not mentioned publicly at this point in the discussion is how it impacts payment of the local share of the state income tax revenue. There has been discussion in the past that the local share of state income tax revenue should be decreased in favor of a greater share for the state coffers. Joliet is anticipating almost $15 million from state income tax revenue in the 2017 budget. Just a few years ago the state was late in paying those revenues and that was before the current crisis. The same idea has also been discussed regarding the local share of gaming revenues.

Joliet has become dependent on both of those revenue sources in its fiscal planning. And it hasn’t been easy. Just 10 years ago Joliet’s gaming revenue share for the first five months of 2007 was $15.2 million. Through May of this year its $7.5million and declining each month. The City recently borrowed more than $70 million to pay for an Environmental Protection Agency mandate that’s been on the books for about 30 years. Joliet’s underground infrastructure is, in part, over 100 years old and needs to be replaced. A five-year plan to accomplish that project begins this month.

Over the last few years Joliet officials have needed to pay close attention to revenues and expenses. The jolt of declining gaming revenues and increasing expenses has brought Joliet officials to a more sensible fiscal approach over the last few years. Let’s hope that realization has arrived for our officials in Springfield.

One last thing…a new City Center residential project is on this week’s City Council agenda. An ordinance to allow a special use permit to develop 35 apartments at 66 thru 76 N. Chicago St., known as the Barber Building, will be discussed and voted on at Wednesday’s council meeting. Work on the structure has already begun in anticipation of approval. Part of the project proposal is a request to use revenue from the Tax Increment Financing District where the project is located.

The project’s developer is Mike Petry, who also developed residential apartments in the former Unitarian Church building on Chicago St. He also is the owner of The Tin Roof restaurant on Chicago St. Residential projects in the City Center are part of the city of Joliet’s overall plan to redevelop the downtown area. FOLLOW US ON FACEBOOK @thetimesweekly

Stay tuned…