Evanston waits to see impact of Rauner fiscal plans

Kevin Mathew, Copy Chief

Gov. Bruce Rauner’s first executive order declared a “financial crisis” in Illinois, but Evanston organizations must wait until Feb. 18 to see his fiscal plan and decide how to adapt.

The most likely changes would involve the Local Government Distributive Fund, a fund collected by income tax and distributed by the state, Evanston’s intergovernmental affairs coordinator Ylda Capriccioso told The Daily.

“What we’ve always heard is that the Local Government Distributive Fund is a fund that could be swept to be used as a stop-gap measure until either new revenues are discovered or created,” she said. “That is not a policy that Evanston supports.”

The state used the LGDF as a quick fix for the deficit in 2011. Local funds balanced out to no overall change when the state increased income tax by 2 percent and decreased the local share of total collections by 4 percent. In February, the income tax is scheduled to decrease while local share will increase. This change is expected to last until 2025, but the overall LGDF effect of this change remains unclear.

“(The budget) will continue to be cost-conscious,” Martha Logan, Evanston’s community engagement manager, said. “Because, although the national economy and the Evanston economy are doing better, the state’s economy is the wild card.”

Larry Bury, deputy director of Northwest Municipal Conference, said a shrinking LGDF would strain local governments, which cannot collect their own income tax. Property taxes are the only major tax local governments can collect, and the conference, a coalition of 45 nearby suburban governments, will defend the LGDF, Bury said.

The conference held a legislative brunch on Tuesday, featuring Evanston mayor and conference president Elizabeth Tisdahl, and a keynote presentation from the governor.

Rauner said he will fix finances on all levels by making the state level run efficiently, via ideas and talent from any party. He recently appointed Donna Arduin, known for reforming budgets in Michigan, New York, Florida and California, as CFO of his “turnaround team.”

Rauner previewed his Feb. 4 State of the State address on Jan. 22 at the University of Chicago, but provided little information for local governments. Catherine Kelly, a spokeswoman for Rauner, told The Daily the governor will outline his financial plans Feb. 18 in his budget address, but she did not comment further.

Some Evanston funds seem safe from cuts, while others will take a little more maneuvering.

Evanston receives $725,727 in grants, mostly for health and community improvement, through the state. However, some of these are paid by federal grants, Capriccioso said, making cuts less likely. The Motor Fuel Tax fund, gasoline revenues distributed by the state, is based on a federal formula, she said.

Pension change will be more complicated, but state and local officials agree it may be the most urgent issue to solve. The state requires Evanston to provide a Police Pension Fund and a Fire Pension Fund, costing Evanston $10.5 million and $7.9 million, respectively.

“Oftentimes if the state can’t feel like they can do a job anymore, a particular service anymore, they push that service onto a municipality,” Capriccioso said. “But they often don’t fund it, so it becomes an unfunded mandate.”

Logan was not as worried about the budget uncertainties after speaking with Evanston CFO Marty Lyons.

“The city’s budget is set for the year, but the city is able to make adjustments as needed if they see there won’t be revenue to meet expenses,” she said. “That’s nothing new.”

Evanston schools estimated about 86 percent of funding from local sources across their 2013-2014 budgets, but state funds are still a major chunk of change.

School District 202 predicted $3.8 million of state funding, with about $2.4 million for transportation, special education and bilingual programs, according to the 2014-2015 budget. Evanston/Skokie District 65 expected $11.7 million of revenue from state sources for 2013-2014, including $4.3 million of unrestricted aid, and about $7.4 million for special education, transportation, bilingual education and the Early Childhood Block Grant. Neither district could be reached for comment.

Although potential cuts can be identified, Evanston is waiting for a clear signal from Rauner.

“We are just patiently waiting to see what the governor’s proposed budget will include or not include,” Capriccioso said.

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