Bill Aims to Slow Borrowing by Illinois Municipalities
A move is afoot to make local governments in Illinois more responsible when borrowing money to finance projects.
State Reps. David McSweeney (R-Barrington Hills) and Jack Franks (D-Marengo) have introduced HB983, which would bar independent consultants from providing information on how “alternate revenue” bonds could be paid off. Consultants often stand to benefit from the borrowing. That task would fall to local chief procurement officers.
The bill would also require alternate revenue bond-funded ventures be able to pay off 150 percent of the debt, up from 100 percent. It also would extend the allowance for petition signatures for a backdoor referendum from 30 to 90 days. To initiate a referendum, this bill would require the lesser of 5 percent (currently 7.5 percent) of registered voters in the governmental unit or 500 signatures of registered voters.
‘Governments Keep Borrowing’
"This is a commonsense bill that allows taxpayers to more easily organize a referendum to oppose local borrowing proposals,” said McSweeney. "We are talking about large sums of taxpayer money. Property taxes are skyrocketing while local governments keep borrowing for what they want and cannot afford.”
The bill comes in the wake of news stories about property taxes soaring in numerous communities where local governments have borrowed money with the promise it would cost taxpayers nothing. Sports stadiums, golf courses, village halls, and other facilities built or bought with alternate revenue bonds are supposed to generate enough money to repay the debts. In many instances, the revenues have fallen woefully short, forcing taxpayers to cover the difference.
‘Oversight in Hands of Taxpayers’
"Municipalities have little oversight when it comes to borrowing millions of dollars which oftentimes end up being a backdoor tax hike on residents," said Franks. "Oversight needs to be put into the hands of the taxpayers. We must increase accountability for our taxing bodies and empower the taxpayers to serve as fiscal guardians.”
Last year the Chicago Tribune reported on property taxes tripling in some small towns to repay bonds local officials promised would cost taxpayers nothing. Tax caps do not apply when the purpose is to repay alternate revenue bonds.
In the blue-collar Chicago suburb of Brideview, for instance, property taxes have tripled in 10 years to repay bonds for Toyota Park, home of the Chicago Fire professional soccer team. Revenue shortfalls some years match the village’s entire police department budget.