Local Government Distributive Fund (LGDF)

PROTECT LOCAL REVENUES

During his February 17 Budget Address, Governor JB Pritzker proposed a 10% reduction to the amount of income tax dollars the state would share with county and municipal governments within the State Fiscal Year (SFY) 2022 State Budget. This equates to a $152 million reduction to counties and municipalities throughout the state compared to distributions in SFY 2021. The purpose of the reduction is to divert local funds to partially offset the State’s $3 billion budget deficit.

This diversion of local revenues will impact communities by imposing additional pressures on local budgets at a time when resources are already being stretched to fund expenses created by the COVID-19 emergency response.

What is the Local Government Distributive Fund?

State-shared income tax revenue is distributed to local governments through the Local Government Distributive Fund (LGDF). LGDF is a state and local funding partnership instituted as part of the establishment of the State income tax in 1969. LGDF revenue helps local governments fund essential services and programs such as public safety, public health and basic infrastructure construction and repair. This shared revenue also reduces the amount of revenue local governments must collect through local taxes.

A review of the history of LGDF distributions shows that the local percentage share of the state income tax distributed through LGDF funding has already been reduced over the years. This has prevented local governments throughout the state from receiving billions of dollars in shared revenue.

Until January 2011, counties and municipalities received 10% of total state income tax revenues through LGDF. Following a temporary increase in state income tax rates in 2011, the percentage of tax revenue allocated to LGDF for distribution to local counties and municipalities declined to 6%. 

In January 2015, the local share of the state income tax increased to 8% when the higher income tax rates declined according to a predetermined schedule established by law. 

The state income tax was permanently increased in 2017 and the local government share was reduced to 5.45% for individual income tax collections and 6.16% for corporate income tax collections for State Fiscal Year (SFY) 2018. 

The LGDF share was slightly increased within the SFY 2021 state budget and is presently 6.06% for individual income tax collections and 6.845% for corporate income tax collections. This is significantly below the 10% share received by counties and municipalities prior to January 2011. 

WHAT CAN YOU DO TO PROTECT YOUR COMMUNITY FROM THE IMPACTS OF THIS DECISION? 

Now more than ever, it is vital that you let Governor Pritzker and your State legislators know that LGDF revenue belongs to counties and municipalities and that the State budget must not be balanced at the expense of  Illinois residents relying on local governments. A sample letter that can be modified and sent to the Governor and your State legislators is available here. 

La Grange Park Legislative Contact Information: 

Senator Steven M. Landek (12th District)

Senator Kimberly A. Lightford (4th District) 

Representative La Shawn K. Ford (8th District)

Representative Emanuel Chris Welch ( 7th District)

Representative Michael J. Zalewski (23rd District)