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Legislative Update

June 29, 2015 | Legislative briefs

The Illinois Municipal League (IML) has provided important information on what happens to local government revenue if a 2016 state budget is not passed by July 1, 2015. The IML reports that on Wednesday, June 10, 2015, Illinois State Comptroller Leslie Munger announced that the budget impasse will lead to the state missing payments if a balanced budget agreement is not reached by July 1, 2015. Specifically, the Comptroller indicated that nearly all state payments will cease on July 1 because the constitution does not permit the payment of the state’s bills without appropriation authority. Below are exceptions and clarifications on certain payments.

• Limited payments will be made including those to pensions, state debt, retiree benefits, temporary assistance for needy families, and those who are elderly, blind, and disabled.
• The state will be able to make most payments to local governments (through the Local Government Distributive Fund/LGDF) because they are not tied to an appropriation. This also includes motor fuel tax, state and local use tax, and the local share of sales tax.
• The state will be unable to make new payments to Medicaid providers of health care to the poor and other state vendors. Non-profits, social service organizations, and small employers will be unable to receive expedited payments. Also, vendors who receive state funding will see their payments stopped after July 1.
• School districts will begin to see the effects on August 10, 2015, which is when they are scheduled to receive their first state aid payment in the new fiscal year.

The IML reports that regardless of whether a 2016 budget is passed, local governments should still receive LGDF money from the state, even if the state cannot make other payments. This also includes motor fuel tax, state and local use tax, and the local share of sales tax.

The IML encourages state leaders to work together and reach a compromise on the state budget as soon as possible.

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