ILLINOIS TAX PLAN PROMPTS CONCERNS OF CITIES

MOUND CITY, Ill. -- Officials of municipalities throughout Illinois are sharing concerns over their financial future in light of Gov. Jim Edgar's proposal that income tax surcharge revenues be eliminated.

"Gov. Jim Edgar's $28.7 billion budget proposal calls for reducing the surcharge revenues from a promised, statewide total of $237 million to zero," said Fred Winkler, mayor of Mound City. "That could devastate our budget."

The surcharge revenues had been promised to communities through fiscal year 1993.

Winkler said that an agreement had been reached with the Illinois General Assembly and governor in 1991 that would provide $155 million, or 50 percent of the local government share of the surcharge in fiscal year 1992 and $237 million, or 75 percent in fiscal 1993.

"This proposal was made temporary for two years," said Winkler. "It would then be considered by the General Assembly and Edgar again in 1993.

"Breaking the 1991 agreement less than a month before municipal governments start their new fiscal year is a dual blow to cities and villages in Illinois," said Winkler.

Most municipal officials included the surcharge revenues in establishing their budgets, said Winkler.

"Under the governor's proposal local officials throughout the state are going to have to cut programs and struggle to make ends meet," said Winkler, who estimated the shortage to his city of about $15,000.

"That doesn't sound like much," said Winkler, "but when you take that out of a $175,000 budget it's a lot. The governor may be proud of his no-tax pledge, but he is placing a hardship on communities who will be starting their new fiscal year soon. It would force us to either raise taxes or cut services and eliminate programs, or both."

Mound City, which had lost almost a third of its population more than 300 people from 1980 to 1990, also lost about $33,000 in state funding because of that.

Edgar proposed his budget in April, which is 3.7 percent higher than this year's budget. But, in doing so, the governor decreased the general revenue fund by $162 million.

He proposed a $13.4 billion general revenue fund boosted by three sources, including the municipalities' share of the surcharge. Other money for the fund would come from increased taxes on liquor and tobacco products and corporate taxes.

Edgar explained that the state's changing fortunes have necessitated lessening what the state can share with cities and towns, and that the moves would prevent tax hikes.

Most Democrats in the House oppose the tax plan and have proposed cuts ranging from $80 to $200 million.

Several officials have expressed anger at the governor's efforts to trim the budget at the expense of the municipalities.

Joan Barr, mayor of Evanston and president of the Northwest Municipal Conference, which represents 35 communities that will all have to cut basic services, delay capital improvements, or raise taxes, told The Associated Press that "The elimination of the surcharge will result in layoffs, delayed street repairs and the elimination of flood control projects."

In the southernmost city of the state, Cairo Mayor James Wilson said his city will be suffering from a double whammy.

"We lost about 1,000 residents since 1980," he said earlier this year. "Everybody knew we would be losing about $75,000 in revenues because of the population loss. But on top of that we can lose a big chunk of our budget because of the surcharge loss."

The Cairo City Council recently approved an increase in the city tax levy that went into effect May 1.

"The new levy, which means about a 5 percent hike in property taxes, will generate about $100,000," said Wilson. "But that still leaves us in a budget crunch," he said.