You can set your watch by it: Every spring, the Illinois Municipal League issues requests for the General Assembly, and every year, a key sticking point is the Local Government Distributive Fund.

What is the LGDF? The means by which municipalities get a cut of income taxes. For a basic explainer, visit tax.illinois.gov/localgovernments/income.html. The annual debate is the municipalities asking to get 10% – the rate agreed to when the state first enacted an income tax almost six decades ago – while the state wants to keep the percentage lower, typically arguing the important benchmark is how much money is generated.

It doesn’t take much math to understand 10% of the overall income tax pool was a much smaller dollar amount in 1970 than it is in 2026. When Capitol News Illinois ran the numbers in 2023, it showed a single percentage-point increase would divert $250 million from state coffers to the LDGF, from where it is apportioned by population.

When I explored the topic in 2023, the simpler question was: Why can’t we just pay property taxes to local governments and income taxes to the state? Frankly, it’s just the state government’s job to collect and disburse money. The Department of Revenue remits 24 types of taxes to local governments, from Automobile Renting Occupation and Use to Video Gaming. With an abundance of government units, imagine the complaints about inefficiency if every city needed its own mini revenue office to process gasoline taxes and E-911 surcharge dollars.

But that list also could be an instruction manual for a cleaner way out of this annual argument: the more power the state gives local governments to generate their own revenue, the less the municipalities would need to rely on getting a cut of income taxes. That would serve the larger goal of making it clearer which elected officials are raising what money, how and for which purpose.

Pushback on such a plan is obvious. Just look at the squawking from mayors who wanted the state to keep collecting its 1% sales tax on groceries rather than take the politically unpopular step of enacting it themselves. But these debates are healthy: Do we want our community to tax groceries? Should there be video gaming terminals everywhere? Is now the time to open a marijuana dispensary?

When living in Gurnee, the village didn’t levy a property or utility tax, balancing its budget with sales and amusement taxes. We can’t all have Six Flags, an indoor waterpark and a giant mall, but lots of smaller-scale choices could be more reflective of community intent while also somewhat liberating local budgets from state whims.

Such changes can be difficult but have long-term benefits. Bold leadership is required.

• Scott T. Holland writes about state government issues for Shaw Local News Network. He can be reached at sholland@shawmedia.com.