Governor Bruce Rauner. Photo by Andrew Morys/Chronicle Media

Yanked state funding could cost Arlington Heights 26 police officers or firefighters.

In Peoria, to make up for the state-funding loss, most administrative departments that run the city of 116,000 would be wiped out.

Those are just two of the doomsday scenarios that exist should the state follow through on Gov. Bruce Rauner’s proposal to cut the Local Government Distributive Funds by 50 percent in order to get the state’s financial house in order.

“What’s really happening is the state is taking its fiscal problems and transferring them to municipalities, which have been more responsible financially,” said David Lloyd, director of the Fiscal Policy Center at Voices for Illinois Children, an advocacy group for children and families in the state.

“They are making the municipalities carry out cuts on behalf of the state,” Lloyd said.

Lloyd noted that the LGD funds are 5 to 10 percent of most towns’ annual general fund revenue.

“Municipalities would have to cut areas in the budget to make up for that lost money. They would have to cut public safety personnel – police and fire – and other core city services,” Lloyd said. “Hit with losses of that magnitude, municipalities would not have a choice. They would have to cut areas in the budget where the money is.”

Those areas include personnel, the biggest part of any municipality budget.

“Every municipality in the state would be hit,” Lloyd said.

An analysis by the Fiscal Policy Center estimates that a total of $634 million would be lost by municipalities across the state, if LGD funds are cut in half.

Communities in Kendall County that would lose at least $1 million in LGD funds, under the current proposal, are:

• Aurora – $9.7 million
• Joliet – $7.2 million
• Oswego – $1.4 million
• Plainfield – $1.9 million

Arlington Heights would see 5 percent of its annual revenue –  $3.7 million – slip away if the Local Government funds are sliced in half.

“It is worth pointing out that the village reduced staff 10 percent during the (2008) recession and we have not increased staffing at all since then,” said Randy Recklaus, village manger of Arlington Heights. “Any further cuts would hit essential services. We have already cut. To make up that revenue, we would have to pass an 11 percent property tax hike.”

Recklaus noted that the Local Government Distributive Funds are not a handout from the state. He said the thought was that local governments would have their own income tax, but a 1969 agreement took that ability away from municipalities in exchange for a portion of the state income tax.

“The last 46 years we have shared with the state and it has worked out well,” Recklaus said.

He said if the proposal is not revamped the effects will be catastrophic and some towns will go bankrupt.

Elgin, which would lose between $5 million and $6 million under the proposal, spends 86 percent of its budget on public safety and public services.

“To get that much out of the budget, you are going to impact public safety,” said Kristine Rogowski, communications director for Elgin. “We run a very tight budget.

“When you talk about cuts like this, combined with freezing property taxes, you are restricting how money is spent,” Rogowski said “It would be very difficult.”

Rogowski said it is important for residents to be aware of what is happening on the state level and that actions there could affect service cuts and fees implemented locally.

Peoria officials said this is a perfect storm of fiscal issues.

“You have pension issues, municipalities lacking revenue, all the angles are covered,” said Jim Scroggins, Peoria’s finance director. “We made the hard decisions in the past. We downsized 150 employees in 2002 and 2003.

“The state has not made those tough decisions, and now we are being punished again.”

Peoria will unveil a Budget Challenge on its website in April. It will ask for residents’ input, providing 6-8 expenditures and 6-8 revenue generators. Scroggins said residents will be asked to balance the budget. That exercise will give residents a taste of the decisions that have to be made to balance the budget, but also get residents’ take on priorities.

“It will let the local elected officials know how we should try to get there,” Scroggins said. “People cannot just sit back and armchair quarterback, ‘You should have done that.’”

Chris Setti, assistant city manager for Peoria, said municipal officials have reached out to lawmakers to express their concerns; and local legislators have provided information back to them on how budget discussion are going. He said the city’s staff is not looking to rally public outcry, but to provide elected officials with ways to make things work.

“Our job is to deal with the facts on the ground and provide a budget of priorities with the revenue that is available,” Setti said. “Our citizens are very aware of what goes on and how to make their voices heard.”