Voters in two Illinois villages have approved home rule status, which Moody’s Investors Service labeled a credit positive for the sector due to the fiscal flexibility afforded by the change.
South Chicago Heights and Willowbrook, both Chicago suburbs, won the change in April 2 elections. Neither is rated by Moody’s.
“Home rule's substantial legal flexibility allows a municipality to raise revenue through a variety of taxes and fees and to issue debt without voter approval, a credit positive,” Moody’s said in a special commentary. “The legal flexibility to raise revenues has become increasingly important for Illinois municipalities as the sector grapples with rising pension costs.”
Sales, property, and hotel/motel taxes can be raised without limit, while non-home rule status caps increases unless voters approve.
Recent home rule requests have faired poorly at the ballot box with five local government status requests failing last November.
Municipalities with a population of more than 25,000 automatically are granted home rule status and do not lose the designation if the population dips below that level.
Smaller cities can ask voters to approve home rule. Moody’s cautioned that it’s no panacea, as municipalities face “practical constraints on raising taxes, particularly localities with residents who have relatively low median family incomes.”
