Illinois is heading into a fiscal storm in 2025, facing a trifecta of challenges that could have mammoth consequences for both the state and its municipalities. The Governor’s Office of Management & Budget (GOMB) has predicted a $3.2 billion budget deficit for the next fiscal year. At the same time, public transit leaders are sounding alarms about a $750 million fiscal cliff by 2026. Additionally, a recent report from Illinois’ nonpartisan Commission on Government Forecasting & Accountability (COGFA) reveals that proposed Tier II pension reforms could saddle Illinois taxpayers with an additional $30 billion in costs through 2045.
Any one of these issues would be difficult to manage, but the convergence of all three simultaneously presents a colossal challenge. This is especially true for tax-and-spend Democrats, who have repeatedly been warned by Republicans to curb and prioritize spending. Despite our calls for fiscal responsibility, Democrats have increased state spending by a staggering 30% under Governor Pritzker. Additionally, with full knowledge of this looming fiscal crisis, there were no discussions whatsoever during the recent veto session about reining in government spending.
One area that must be shielded from the fallout is the Local Government Distributive Fund (LGDF). The LGDF represents a crucial partnership between the state and local governments, ensuring municipalities receive a share of state income tax revenues to support essential services like police, fire, and road maintenance. The fund is supposed to return 10% of income tax revenues to local governments, but past governors and now Governor Pritzker have routinely broken this promise, siphoning off a portion of the funds to balance his own budget. Right now, municipalities are receiving just 6.47% of the promised 10%.
In a move that further burdens local governments, Gov. Pritzker recently eliminated the state’s grocery tax. Democrats touted it as a “win” for taxpayers, but this “victory” came at the expense of municipalities. By shifting this burden to local governments, the state simply passed the buck, leaving local units of government to raise property taxes to fill the gap. Illinoisans are already saddled with the second-highest property tax burden in the country.
If the majority party was willing to eliminate the grocery tax without a second thought, it’s easy to imagine they might consider further reductions or the elimination of the LGDF. Any additional cuts to or elimination of the LGDF would only increase pressure on local governments, causing them to raise local taxes or reduce essential services.
When Pritzker presents his annual Budget Address in February, I will be listening closely for his pledge to leave the LGDF untouched. These revenues are a lifeline for municipalities, particularly as local leaders grapple with their own strained budgets. Rather than taking more and more of these funds that are earmarked for local use, lawmakers must tighten the belt and focus on real, sustainable solutions to the state’s budget crisis.
Any further cuts to the LGDF should be unequivocally off the table. It’s time for the General Assembly to prioritize the fiscal health of Illinois without sacrificing the ability of local governments to serve their communities.
• State Sen. Craig Wilcox, a Republican from McHenry, represents the 32nd District in McHenry and Lake counties. His district office is in Woodstock.