Illinois’ Local Government Tangle

A case study of local governments in Illinois.

A few years back, I contributed to this project that took a fine-tooth comb to local governments in Illinois. It was meant to catalogue every local government in the state and provide a lot of useful data on the different types—info on how they raise revenue, their governance structures, procedures for how they incorporate, etc.

It’s not the sexiest policy topic. The number of people interested in the collective annual revenue of Illinois drainage districts is undoubtedly a small one. Still, it’s important since local govs are frequently the ones in most direct contact with constituents.

Anyway, the project (“An Inventory of Local Governments in Illinois”) is now completed. This is a big deal, and not just because it explains the differences between Illinois’ local water authorities, water commissions, water reclamation districts, and water service districts.

On a serious note, this VIP (very important project) is a resource that can be useful in untangling a uniquely weird thing for the state: Illinois has way more local governments than any other state, something that has caused issues for years. In this post, I want to explain why this is an issue and tie it to some recent news on the pandemic and recession.

What’s with the hubbub about local governments in Illinois?

First, some quick definitions. When I say “local government” (LG in this piece), this includes counties, municipalities (cities, towns, villages), townships, school districts, and “special purpose districts.” You can order them in these buckets:

• General purpose governments are counties, municipalities, and townships. (And in the case of Louisiana, parishes.)
• School districts can be individual governments if they are administered separately from a general purpose government. Some states have school districts as departments or parts of general purpose governments.
• Special purpose districts, or special districts, are govs that fulfill specific roles. These can be public library districts, park districts, fire protection districts, water service commissions, and more. (It’s common for municipalities to offer these special services themselves, just as its common for special districts to exist in places lacking a town or city to do so.)

States differ greatly on the makeup of their LGs. Connecticut and Rhode Island lack counties. “Townships” and “towns” are interchangeable in northeast states but not in the Midwest. School districts are sometimes categorized under special purpose districts, while counties are frequently tallied as their own category outside of general purpose governments.

Now for Illinois, every agency that reports on this subject agrees the state has more LGs than the rest. But from here, agreement splits when it comes to the exact number of local govs here.

For instance, the U.S. Census Bureau’s most recent Census of Governments (2017) varies from the tally of the Illinois State Comptroller’s Office, which monitors LGs as part of its state accounting mandate. We aren’t talking a difference of a few dozen, either: The former listed 6,919 while the latter tallied 8,529.

Meanwhile, the Illinois Department of Revenue, which tracks the number of LGs because of the taxes they collect, believes there are only 6,042; the Inventory project mentioned at the top reports 8,923. I’m biased here, but I would say this last number is the most accurate since the report has the most commonsense parameters and its data is the most up to date.

These discrepancies have to do with the differences in the reporting criteria. (E.g., whether or not it collects taxes, whether a LG is autonomous or not, etc.) The Inventory project has a good explainer on how reporting agencies differ on this. The important takeaway here is that, since experts can’t agree on how many LGs are in Illinois, there’s no clear-cut solution. (I’ll explain why a solution is needed in a bit.)

How much does Illinois stand out among other states? Let’s use the Census of Governments to compare since that data is standardized. As you’ll see in the snippet of a larger table below, Illinois has significantly more local governments despite not being the most populous state.

What’s the problem with having so many LGs?

This isn’t just some quirk for Illinois, nor is this only an issue when looked through a small government or libertarian lens.

Rather, the exorbitant number of LGs are evidence of duplication of public services and legitimately unnecessary layers of bureaucracy. Both of these are inefficiencies by themselves: Duplicating services means a resident is taxed more than once for something they shouldn’t be, while layers of overlapping jurisdictions can make it difficult for residents or other public entities to navigate that network of governments.

Making matters worse, these inefficiencies beget other ones, like intergovernmental breakdowns I outlined in this previous piece. Some believe the extra layers of LG can also give cover to government corruption. Plus, a much of local government in Illinois is funded through property taxes, which are very high and a very touchy subject here. Finally, all of these issues can chip away at a public’s trust in their institutions.

I should say here that simply having so many of one type of LG isn’t inherently bad. What doesn’t work in Illinois works elsewhere. North and South Dakota, which have lower population density, depend on hyper-local government structures that require an abundance of townships. Here, townships work best for the states’ dispersed communities. In turn, both Dakotas have the most LGs for every 100,000 resident, but you won’t find people complaining about local government bloat here like in Illinois.

The issue for Illinois isn’t “we have so many” but rather “we have too many,” in general and of particular types. Illinois has more general purpose governments and special districts of any state. This is weird, since special districts are usually meant to provide services normally offered by general purpose governments; by having so many of both, it indicates local government policymakers over the years weren’t as deliberate in creating these units as they should have been. Because of this, Illinoisans pay tens of billions of dollars every year in taxes to fund LGs, many of which are no longer essential.

What solutions have been proposed?

I can’t provide a “correct” breakdown of how they should fund local governments, but the current system simply doesn’t make sense. The tangle of local governments in Illinois has been a bit of a running joke in policy circles for years. It’s like Illinois’ version of the Trump administration’s “Infrastructure Week”—something will happen one day!

But unlike the Trumpian Infrastructure Week, there have actually been conversations and proposals on how to deal with the high number of LGs in Illinois. A lot of the focus in Illinois has also been on townships since they’re one of the most frequent governments to overlap with municipalities and special districts. If they do overlap, rationalizing that extra level of government services becomes harder, which is why legislation over the past several years has allowed townships in some counties to dissolve themselves by voter referendum.

Other legislation has enacted or allowed:

• A four-year moratorium on creating new LGs in Illinois
• The absorption of road districts into townships
• The dissolution of governments under some circumstances

Separately, school districts have also been the subject of much debate in Illinois since they’re both one of the most common LGs in Illinois, account for most of the property taxes collected in the state, and sometimes struggle to spend efficiently. A bill that would create a commission to determine which districts to consolidate is currently making its way through the Illinois General Assembly.

There are also non-legislative solutions to lowering the cost of local government in Illinois. Chiefly, neighboring and overlapping LGs can share services or equipment. School districts can share transportation services like buses, villages establish Intergovernmental Agreements to coordinate emergency services, stuff like that.

I should point out that simply “getting rid of all townships” or something broad like this is a bad idea. For example, townships might be redundant in much of the more populous parts of Illinois, but they’re vital in other parts of the state, much like they are in strictly rural states. Solutions need to be tailored to specific geographies within the state.

There are drawbacks to other proposals, too. With school districts, consolidation can be polarizing since schools play a significant role in communities. Additionally, dissolving or consolidating any local government means cutting jobs. While the proposals can improve overall LG efficiency, there are consequences that policymakers, legislators, and voters need to ponder heavily. Decision makers need to keep in mind that the goal isn’t simply to “decrease the number of local governments in the state,” but instead to “make local government more efficient.”

The bottom line here is that, just like the number of LGs in Illinois, there’s no shortage of proposed solutions to decreasing the number of local govs or their costs. But picking the right solution or combination of solutions is not a simple thing to do.

Illinois local governments and the COVID-19 recession

It’s not news that the pandemic’s economic squeeze on governments across the U.S. preceded this period. Things didn’t go from “great” to “bad” so much as “not great” to “potentially apocalyptic.” The actual hit to budgets for states didn’t meet expectations, but this likely wasn’t the case for local governments. Moody’s Analytics upgraded its forecasts for both from “negative” to “stable,” but also pointed out that states are likely better off than local governments because of the resources at their disposal.

It’s hard to be more specific since data on local governments aren’t aggregated, but let’s give it a shot. Illinois local governments, we can guess things remain relatively bad thanks to a statewide survey from August, which reported 87% of municipalities had projected budget shortfalls, and a nationwide survey, which found 71% of municipalities felt Congress needed to include direct state and local aid in the next stimulus legislation.

We can also look at employment trends in the public sector. Jobs in all levels of government took a hit like other industries. But unlike the rebound for these other sectors, the one for public sector jobs has been slower. Nationally, the local gov job market (excluding those in education) was still 350,000 jobs smaller this March than it was in March of 2020. Illinois has been no exception to this dip.

There is some good news though. This past March saw decent progress for the collective public sector. The success is due largely to the American Rescue Plan’s passage that month. A huge chunk of the ARP was a $350 billion relief fund for states and local governments, money that can used to pay down existing debt, retain/expand services, or invest in capital.

This is especially relevant for Illinois municipalities. Harvey, a city in Chicago’s South Suburbs, went bankrupt a few years ago, an event that many thought foretold similar events for other towns in the state. Last year, several cities approved cuts to stay afloat, and voters in three small towns near St. Louis opted to merge their communities in order to save costs. In other words, the situation could use some improvement.

It remains to be seen exactly how the ARP relief fund will impact the broader conversation about making local government more efficient. But it’s obvious that the millions of dollars allotted to Illinois and its LGs can buy policymakers more time in picking the best strategy.

Local governments are a vital part of public support for communities. They most directly offer and administer services, after all. It’s why we need commonsense systems of LGs. Illinois, which has historically had more LGs than any other state, would welcome significant changes to its own network of local government.

Related reading:

• In case you missed the link, here’s where you can find “An Inventory of Local Governments in Illinois.
• NPR offers more insight to the Inventory project.
• You can read the Census Bureau’s criteria for counting local governments here.
• The Washington Post explained in February the economic toll on state and local govs during the past year.
• The ICMA has more on how local governments have responded to this downturn.
• Centreville, one of the Illinois towns that voted to consolidate, has struggled to address persistent flooding and poor sewage infrastructure.
• Every month, the Economic Policy Institute reviews the latest jobs report. You can read them here.