Azavar Government Solutions Blog

Local governments throughout the State of Illinois are bracing themselves for what could be a costly invoice from the Illinois Department of Revenue (IDOR). Earlier this year, IDOR stated that it had located misallocated revenue linked to the Personal Property Replacement Tax (PPRT) Fund which began two years ago. An overpayment of around $168 million was found to have been given to local governments receiving PPRT disbursements, throughout the State.

Mayors and managers work hard every day to ensure their workers make the most of their time on the job, providing the services and programs their taxpayers want and need as efficiently and effectively as possible.

With municipal finances under continued strain, local government managers are seeking innovative ways to maximize revenues and stabilize budgets. Several municipalities are discovering significant benefits through municipal consortiums that allow them to achieve competitive terms for a variety of supplies and services. One area that still offers advantage is the opportunity to negotiate lower natural gas prices by group purchasing as part of a consortium. 

Some municipalities may shy away from the idea of independent natural gas purchasing because of the perceived benefits of bartering rights-of-way-compensation for free gas. They may also be put off by the supposed risks of moving away from what may be perceived to be a fixed-price agreement with a utility provider but is typically pegged to the market price offered at that time by the franchisee. 

A city that previously operated as a sales tax haven may struggle in the short term to operate with reduced income as businesses choose to terminate rebate agreements, but it ultimately has the opportunity to re-establish fiscal security based on sound financial management and re-optimized revenues, leading in turn to stronger bond ratings. Until then, these communities will struggle to maintain quality bond ratings.

Credit agencies such as Standard and Poor’s allocate a significant number of points to evidence of this kind of stability: the Village of Harwood Heights is just one, positive example of a community that has managed to regain its A+ rating after weathering the Great Recession, thanks to an improvement in liquidity without the use of sales tax rebate sharing agreements that are being challenged in court. Download the case study.

For the large majority of local governments in the state of Illinois, sales taxes and property taxes remain the lifeblood of their municipal revenue. The fallout from the Great Recession has made city managers even more acutely aware of their responsibility to maximize and enhance revenues whenever possible and ensure equitable assessment and collection of taxes across their communities.