2015/11/09 - Walter's Blog: State Budget Impasse

You are no doubt aware of the ongoing budget crisis going on at the Illinois state government. The state government has now gone four months without an approved annual budget and numerous state services are going unfunded. In addition, there are some municipal government revenues that are being held up due to the impasse.

Although these revenues do not affect the state budget or add to the state’s debt, the following municipal revenues are being held because of the lack of a budget appropriation: Motor Fuel Tax (MFT), video gambling, use tax, and 911 tax. The most significant of these for the City of O’Fallon is the Motor Fuel Tax. We use MFT funds for capital projects, street maintenance, and snow removal. The other revenue sources are relatively minor but still contribute to funding O’Fallon’s annual budget.

When a state budget is approved, these revenue sources will be released in full to municipalities but it is uncertain when that might occur. The Governor and General Assembly do not appear to be close to a resolution. So far, we have been able to maintain City services with minimal impact to the budget. However, if MFT continues to be withheld during the winter we may be challenged in funding our snow removal activities.

There is another option: a bill (HB 4305) has been proposed that would restore appropriation authority for Motor Fuel Tax (MFT), casino gaming, video gaming, 9-1-1, and other non-municipal purposes. It is anticipated that the General Assembly may vote on this bill next week. Releasing the funds would not impact the state budget and would ensure that cities, villages, and towns continue to receive funding for important public purposes. We are hopeful the bill will pass and these municipal revenues will no longer be held hostage by the state’s budget crisis.

The City of O’Fallon’s primary revenue sources (such as the income tax, property tax, and sales tax) are not subject to state budget appropriation and we continue to receive those funds. As a result, most of our services are unaffected by the budget impasse. However, economic growth will be challenged in O’Fallon and throughout Illinois if the state government is unable to resolve its substantial financial shortfalls. In the meantime, the City of O’Fallon continues to operate under a balanced budget.