Home #Nationalism New Illinois law prohibits excessive accumulation of township reserve funds

New Illinois law prohibits excessive accumulation of township reserve funds


New Illinois law prohibits excessive accumulation of township reserve funds

Money (copy)
Shutterstock photo


A measure signed into law by Gov. Bruce Rauner caps the amount of taxpayer money that township officials can sock away in numerous local government accounts.

Gov. Bruce Rauner signed HB 1896 after it passed the legislature by a near-unanimous vote. The bipartisan bill, which was sponsored by Rep. Brad Halbrook, R-Shelbyville, Rep. Carol Ammons, D-Urbana, and Sen. Chapin Rose, R-Mahomet, grew out of an investigation by the Edgar County Watchdogs group into financial records of Shelbyville Township southeast of Springfield.

The Watchdogs group, a citizen organization that advocates for transparency in local governments across Illinois, found that Shelbyville Township was stockpiling funds in multiple accounts that far exceeded what the Illinois Supreme Court found in 1969 to be reasonable. The township’s Medicare Fund contained nearly 18 times what was deemed sufficient based on average expenditures; the Unemployment Fund, more than 205 times the needed amount; and the Workers Compensation Fund, more than 63,000 times the required amount to pay bills, according to the citizens group.

The township also doled out more than $93,000 over a recent four-year period to nonprofit groups the township board felt merited the money, the Watchdogs group found.

In the wake of those revelations, some Shelbyville Township officials have resigned, and the board plans to rebate excess funds back to the taxpayers, according to Kirk Allen, one of the Edgar County Watchdogs’ researchers.

“It’s good because those types of people didn’t have an interest in doing what’s best for the people …” Allen told Illinois News Network. “Good people step up and fill the void.”

Nearly 270 public officials have left their positions as a result of the transparency group’s investigations over the past five years, he said.

Evidence of excessive local taxation is common around Illinois, Allen said. Even though the state is broke as a result of out-of-control spending policies, he said, local boards can raise property taxes by up to 5 percent annually. The boards that oversee townships are often advised by attorneys to seek the maximum amount year after year regardless of projected service needs, according to Allen.

Township board members also gain from handing out taxpayer funds to community groups and nonprofits, he said.

“It’s a way to secure their re-election,” Allen said, adding that such donations also make them look like saints in the community, even as the property tax burden continues to rise.

HB 1896 basically codifies the 1969 high court decision by requiring all township funds, with the exception of capital funds, not to exceed 2.5 times the annual expenditure based on a three-year average, according to Rep. Halbrook, who also said Shelbyville Township was in the process of correcting its problems.

Excessive accumulation of local funds is a big problem affecting several townships, Halbrook said, adding that he expected that some townships would lower levies to get their finances in order.

“They’re going to have to make decisions about whether they have to rebate or transfer the money,” he told Illinois News Network.  “I’m very hopeful that there will be rebating going on.”

Halbrook sees the accumulation-of-funds issue as another possible reason to move forward on local government consolidation efforts. Laws have become increasingly complex, and some of the part-time elected officials who oversee local agencies may not be able to keep up, he said.

“I’m for consolidation when it makes sense, like coterminous townships,” Halbrook said.

Staff members at the Chicago-based Better Government Association also expressed optimism that the new law would do some good.

“The BGA has seen through research and investigation that many townships do keep significant amounts of money in reserves,” Madeleine Doubek, the BGA’s policy and civic engagement director, said in an email to Illinois News Network. “We supported this legislation because of that.”

Township officials should consider rebating excess funds to taxpayers, Doubek said.

“If they’re building up reserves every year, then in a given situation, it could be that they’re taxing too much,” she said.

Doubek, however, stopped short of saying that accumulation of funds by townships would be evidence of excessive taxation as a general rule.

Her colleague, Jose Sanchez, a BGA policy analyst and state lobbyist, also sees the passage of HB 1896 as positive.

“My hope would be that they, number one, assess what the proper property tax payments should be and then, second, look at services that haven’t been fulfilled or any changes to infrastructure or improvements that need to be made,” Sanchez told Illinois News Network.

Otherwise, local taxpayers will have doubts about the ability of the government agencies they are funding to provide efficient public services, he said.