The mayor of Orland Park has reservations about the state’s proposal to move to a graduated income tax, saying the anticipated revenues cannot fix the budget-draining pension system.
“They refuse to address the elephant in the room, which is pensions; the pension system is not sustainable,” Mayor Keith Pekau told the South Cook News. “They are willing to put a constitutional amendment on the ballot for income taxes but not for pensions.”
The legislature has proposed a potential statewide referendum for November 2020 that would switch Illinois from a flat income tax rate to a graduated system that would place a greater share of the tax burden on those making $250,000 or more. Pekau does not back that solution.
Orland Park Mayor Keith Pekau | Village of Orland Park website
The state’s failure to fix the pension system continues to drive up costs for all Illinois residents, and has contributed to year-over-year declines in population.
“Illinois is one of two states that is a net exporter of people,” Pekau said. “Illinois, and the other is West Virginia, which is depressed because of its coal industry. We have a world-class city, amazing farmland, water resources that are the envy of many states – indeed many countries – and we are losing people to Indiana. There is opportunity for growth in Illinois if you put tax-friendly policies in place.”
The state has lowered the amount of income-tax revenue sharing it does with municipalities, Pekau added, through the Local Government Distributive Fund. In 2011, it was 10 percent, but the current rate is 5.7 percent, amounting to an approximate $4 million loss in revenue for the Village of Orland Park.
The state has also fallen short on school funding, which pressures local municipalities to make up the shortfall by raising property taxes.
"The only other option they have is to raise property taxes," Pekau said. "You raise taxes, it depresses the economy, and the last thing we need is less growth. I oppose the graduated tax plan because I don’t think the state has a revenue problem, it has a spending problem.”