The changes articulated in HB2087 will have a significant impact on the funding of local municipalities and counties. By increasing the percentage of tax revenue allocated to the LGDF, local governments are expected to receive more consistent and stable funding, allowing them to better plan and execute local services and development projects. This financial boost is particularly crucial given the increasing demands on local budgets due to infrastructure needs and public services. However, the effectiveness of the bill in fulfilling its intent will depend on the ongoing revenue performance of the state.
House Bill 2087 amends the Illinois Income Tax Act and the State Revenue Sharing Act to modify the allocation of tax revenues into the Local Government Distributive Fund (LGDF). Specifically, it provides that 8% of the net revenue collected from income taxes imposed on individuals, trusts, and estates, as well as on electing pass-through entities, will be deposited into the LGDF. Additionally, it specifies a 9.11% allocation from corporation tax revenues. These changes aim to enhance the financial resources available to local governments across Illinois, effective July 1, 2023.
While the bill has garnered support from various stakeholders who argue that increased funding for local governments is essential, there are potential points of contention regarding how these changes will actually materialize in practice. Opponents may raise concerns about dependency on state revenue, particularly given the unpredictability of tax collections, which could leave municipalities vulnerable. Additionally, differing views on how funds are distributed among various local entities may also lead to discussions about equitable funding practices across the state.