Decatur passes budget out of balance by $3 million

DECATUR (Heartland Newsfeed/Illinois Policy Institute) — As its population and tax base erode, the city of Decatur passed a budget for fiscal year 2018 more than $3 million in the red.

The Decatur City Council passed a budget more than $3 million out of balance Dec. 4, citing growing costs and declining revenues. The shortfall is a combination of deficit costs and a decline in multiple revenue streams – including revenue from sales taxes, cables taxes and hotel taxes, which have all declined, according to the Decatur Herald & Review. That lost revenue should be no surprise, given the rate at which Decatur is shrinking. With a population drop of 3,400, or 4.5 percent, from 2010 to 2016, Decatur is Illinois’ fastest shrinking city. Among Illinois cities with populations over 50,000, that is the worst mark on a percentage basis. The population loss equates to significant lost revenue beyond just a loss in local tax revenue, too. The local government distributive fund, or LGDF, distributes shares of state personal and corporate income taxes to local governments not based on need, but on share of the state population. The rapid rate at which Decatur is shrinking makes for a noticeable loss in revenue – Decatur is set to lose $1.4 million in tax revenue from the state for this coming budget, contributing to its budget shortfall. As part of the state budget lawmakers agreed to in July, LGDF funding was also cut by 10 percent. Losing residents – and therefore losing tax revenue – could lead to further tax hikes on remaining Decatur residents, potentially pushing more of them to flee the once-thriving central Illinois city. It’s an unstable cycle that Decatur cannot afford to put itself on. To the city’s credit, officials might already be starting to recognize this. Decatur Mayor Julie Moore Wolfe told WAND-TV the $3.2 million deficit is “a significant amount of money” to either need to cut or find new revenue to cover, but that a tax hike would not be ideal for Decatur residents. Wolfe’s current sentiment wasn’t shared by the Decatur City Council in 2015, though, when members hiked the city’s property tax levy by nearly 15 percent. Research from the nonpartisan Tax Foundation shows the median property tax bill for a home in Macon County, where Decatur is the county seat, at $2,004 – higher than most counties in Illinois and not a welcome sight for Decatur taxpayers. For Decatur to right the ship in the face of a budget deficit and declining population, local officials need to find ways to reform spending practices moving forward. State officials also, though, need to make certain they are not placing an undo burden on cities like Decatur with costly mandates and regulations that hurt its wealth-creating sectors, such as manufacturing. Otherwise, Illinois’ once-thriving cities will continue to see downward trends in population, revenue and promise.