Bill Text: IL HB1753 | 2025-2026 | 104th General Assembly | Introduced

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Bill Title: Amends the Financially Distressed City Law of the Illinois Municipal Code. Provides that, if a financially distressed city or the city's Financial Advisory Authority is awarded a State grant, any moneys the financially distressed city or Authority would be required to match under the grant are waived unless the moneys under the grant come from federal moneys that require the match. Provides that a municipality's status as a financially distressed city may not negatively impact a decision of whether or not to award a State grant to the municipality or negatively impact the amount of moneys received by the municipality from a State grant. Provides that, in addition to a request by the corporate authorities of a municipality to be certified and designated as a financially distressed city, the State Comptroller may conduct a preliminary review of the municipality's finances and establish a review team to make recommendations to the Governor for a municipality to be certified and designated as a financially distressed city. In the provisions concerning review by the State Comptroller, review team, and Governor, expands the categories allowing a municipality to become a financially distressed city. Includes provisions allowing the municipality's Financial Advisory Authority to commence an action in circuit court to enforce the Law if the corporate authorities or employees of the municipality materially violate the provisions of the Law. Makes conforming and other changes.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2025-01-28 - Referred to Rules Committee [HB1753 Detail]

Download: Illinois-2025-HB1753-Introduced.html

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104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 HB1753 Introduced , by Rep. Debbie Meyers-Martin SYNOPSIS AS INTRODUCED:
65 ILCS 5/8-12-2 from Ch. 24, par. 8-12-2
65 ILCS 5/8-12-3 from Ch. 24, par. 8-12-3
65 ILCS 5/8-12-4 from Ch. 24, par. 8-12-4
65 ILCS 5/8-12-4.5 new
65 ILCS 5/8-12-10.5 new
65 ILCS 5/8-12-21.5 new
65 ILCS 5/8-12-23 from Ch. 24, par. 8-12-23
Amends the Financially Distressed City Law of the Illinois Municipal Code. Provides that, if a financially distressed city or the city's Financial Advisory Authority is awarded a State grant, any moneys the financially distressed city or Authority would be required to match under the grant are waived unless the moneys under the grant come from federal moneys that require the match. Provides that a municipality's status as a financially distressed city may not negatively impact a decision of whether or not to award a State grant to the municipality or negatively impact the amount of moneys received by the municipality from a State grant. Provides that, in addition to a request by the corporate authorities of a municipality to be certified and designated as a financially distressed city, the State Comptroller may conduct a preliminary review of the municipality's finances and establish a review team to make recommendations to the Governor for a municipality to be certified and designated as a financially distressed city. In the provisions concerning review by the State Comptroller, review team, and Governor, expands the categories allowing a municipality to become a financially distressed city. Includes provisions allowing the municipality's Financial Advisory Authority to commence an action in circuit court to enforce the Law if the corporate authorities or employees of the municipality materially violate the provisions of the Law. Makes conforming and other changes.
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A BILL FOR
HB1753 LRB104 08074 RTM 18120 b
AN ACT concerning local government.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Municipal Code is amended by
changing Sections 8-12-2, 8-12-3, 8-12-4, and 8-12-23 and by
adding Sections 8-12-4.5, 8-12-10.5, and 8-12-21.5 as follows:
(65 ILCS 5/8-12-2) (from Ch. 24, par. 8-12-2)
Sec. 8-12-2. (a) Pursuant to the authority of the General
Assembly to provide for the public health, safety and welfare,
the General Assembly hereby finds and declares that it is the
public policy and a public purpose of the State to offer
assistance to a financially distressed city so that it may
provide for the health, safety and welfare of its citizens,
pay when due principal and interest on its debt obligations,
meet financial obligations to its employees, vendors and
suppliers, and provide for proper financial accounting
procedures, budgeting and taxing practices, as well as
strengthen the human and economic development of the city.
(b) It is the purpose of this Division to provide a secure
financial basis for the continued operation of a financially
distressed city. The intention of the General Assembly, in
enacting this legislation is to establish sound, efficient and
generally accepted accounting, budgeting and taxing procedures

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and practices within a financially distressed city, to provide
powers to a financial advisory authority established for a
financially distressed city, and to impose restrictions upon a
financially distressed city in order to assist that city in
assuring its financial integrity while leaving municipal
services policies to the city, consistent with the
requirements for satisfying the public policy and purposes
herein set forth.
(c) It also is the purpose of this Division to authorize a
city which has been certified and designated as a financially
distressed city under the procedure set forth in Section
8-12-4, and which has by ordinance requested that a financial
advisory authority be appointed for the city and that the city
receive assistance as provided in this Division, and which has
filed certified copies of that ordinance in the manner
provided by Section 8-12-4, to enter into such agreements as
are necessary to receive assistance as provided in this
Division and in applicable provisions of the Illinois Finance
Authority Act.
(Source: P.A. 93-205, eff. 1-1-04.)
(65 ILCS 5/8-12-3) (from Ch. 24, par. 8-12-3)
Sec. 8-12-3. As used in this Division:
(1) "Authority" means the "(Name of Financially Distressed
City) Financial Advisory Authority".
(2) "Financially distressed city" means a home rule any

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municipality which is a home rule unit and which (i) is
certified and designated by the Department of Revenue as being
in the highest 5% of all home rule municipalities in terms of
the aggregate of the rate per cent of all taxes levied pursuant
to statute or ordinance upon all taxable property of the
municipality and as being in the lowest 5% of all home rule
municipalities in terms of per capita tax yield, and (ii) is
designated by joint resolution of the General Assembly as a
financially distressed city under Section 8-12-4.
(3) "Home rule municipality" means a municipality which is
a home rule unit as provided in Section 6 of Article VII of the
Illinois Constitution.
(4) "Budget" means an annual appropriation ordinance or
annual budget as described in Division 2 of Article 8, as from
time to time in effect in the financially distressed city.
(5) "Chairperson" means the chairperson of the Authority
appointed pursuant to Section 8-12-7.
(6) "Financial Plan" means the financially distressed
city's financial plan as developed pursuant to Section
8-12-15, as from time to time in effect.
(7) "Fiscal year" means the fiscal year of the financially
distressed city.
(8) "Obligations" means bonds, notes or other evidence of
indebtedness issued by the Illinois Finance Authority in
connection with the provision of financial aid to a
financially distressed city pursuant to this Division and

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applicable provisions of the Illinois Finance Authority Act.
(Source: P.A. 93-205, eff. 1-1-04.)
(65 ILCS 5/8-12-4) (from Ch. 24, par. 8-12-4)
Sec. 8-12-4. Certification and designation as financially
distressed city.
(a) In order to be certified as a financially distressed
city and receive assistance as provided in this Division: ,
(1) a home rule municipality shall first, by ordinance
passed by its corporate authorities, request (i) that the
Department of Revenue certify that it is in the highest 5%
of all home rule municipalities in terms of the aggregate
of the rate per cent of all taxes levied pursuant to
statute or ordinance upon all taxable property of the
municipality and in the lowest 5% of all home rule
municipalities in terms of per capita tax yield, and (ii)
that the General Assembly by joint resolution designate it
as a financially distressed city. A home rule municipality
which is so certified and designated as a financially
distressed city and which desires to receive assistance as
provided in this Division shall, by ordinance passed by
its corporate authorities, request that a financial
advisory authority be appointed for the city and that the
city receive assistance as provided in this Division, and
shall file a certified copy of that ordinance with the
Governor, with the Clerk of the House of Representatives

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and with the Secretary of the Senate; or .
(2) the State Comptroller may conduct a preliminary
review to determine the existence of probable financial
stress within a home rule municipality if one or more of
the following occur:
(A) the State Comptroller requests that the
Department of Revenue certify that the municipality is
in the highest 5% of all home rule municipalities in
terms of the aggregate of the rate per cent of all
taxes levied pursuant to statute or ordinance upon all
taxable property of the municipality and in the lowest
5% of all home rule municipalities in terms of per
capita tax yield, and the Department certifies the
same;
(B) the city council or the mayor of a
municipality or school board makes a written request
for a preliminary review and that request identifies
the existing or anticipated financial conditions or
events that make the request necessary;
(C) the State Comptroller receives a written
request from a creditor with an undisputed claim
against the municipality that exceeds the greater of
$10,000 or 1% of the annual general fund budget of the
municipality and that remains unpaid 6 months after
its due date provided that the creditor notifies the
municipality in writing at least 30 days before its

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request to the State Comptroller of its intention to
submit a written request under this paragraph;
(D) the State Comptroller receives, not earlier
than 60 days before the next municipal election, a
petition containing specific allegations of municipal
financial distress signed by at least 25% of the
electors within the municipality who voted at the last
general election at which a Governor was elected;
(E) the State Comptroller receives written
notification that a municipality has not timely
deposited its minimum obligation payment to the
municipality's pension fund as required by law;
(F) the State Comptroller receives written
notification that the municipality has failed for a
period of 7 days or more after the scheduled date of
payment to pay wages and salaries or other
compensation owed to employees or benefits owed to
retirees;
(G) the State Comptroller receives written
notification from a trustee, paying agent, bondholder,
or auditor engaged by the municipality of a default in
a bond or note payment or a violation of one or more
bond or note covenants;
(H) the State Comptroller receives a resolution
from either chamber of the General Assembly requesting
a preliminary review;

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(I) the municipality is delinquent in the
distribution of tax revenues, as required by law, that
it has collected for another taxing jurisdiction, and
that taxing jurisdiction requests a preliminary
review;
(J) the municipality has been assigned a long-term
debt rating within or below the BBB category or its
equivalent by one or more nationally recognized credit
rating agencies; or
(K) the existence of other facts or circumstances
that, in the State Comptroller's sole discretion, are
indicative of probable financial stress.
Before commencing the preliminary review under this
paragraph (2), the State Comptroller shall provide the
municipality written notification that he or she intends
to conduct a preliminary review. Elected and appointed
officials of the municipality shall promptly and fully
provide the assistance and information requested by the
State Comptroller for that municipality in conducting the
preliminary review. The State Comptroller shall provide a
preliminary report of his or her findings to the
municipality within 20 days after the date the preliminary
review begins. A copy of the preliminary report shall be
provided to each State Senator and State Representative
who represents that municipality. The municipality may
provide comments to the State Comptroller concerning the

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preliminary report within 5 days after the preliminary
report is provided to the municipality.
If the State Comptroller believes there is probable
financial stress after his or her preliminary review and
any input from the municipality, the State Comptroller
shall establish a review team under Section 8-12-4.5. A
copy of the preliminary report shall be provided to the
review team and each State Senator and State
Representative who represents that municipality, and the
review shall be posted on the State Comptroller's website.
The review team shall examine the financial situation of
the municipality and complete a final report as provided
in Section 8-12-4.5.
If the Governor believes that probable financial
stress exists for the municipality to be certified as a
financially distressed city under this Section after
reviewing a final report prepared under Section 8-12-4.5,
the Governor may, by proclamation, certify and designate
the municipality as a financially distressed city and
authorize appointment of the municipality's Authority
under Section 8-12-7. The proclamation shall be filed with
the Secretary of State and the corporate authorities of
the municipality.
(b) Upon the filing of the certified copies of the that
ordinance under paragraph (1) of subsection (a) or upon the
written proclamation by the Governor filed with the Secretary

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of State and corporate authorities of a municipality under
paragraph (2) of subsection (a), as required by this Section
this Division and all of its provisions shall then and
thereafter be applicable to the financially distressed city,
shall govern and control its financial accounting, budgeting
and taxing procedures and practices, and, subject to the
limitations of subsection (a) of Section 8-12-22, shall remain
in full force and effect with respect thereto until such time
as the financial advisory authority established under Section
8-12-5 is abolished as provided in subsection (c) of Section
8-12-22.
(Source: P.A. 86-1211.)
(65 ILCS 5/8-12-4.5 new)
Sec. 8-12-4.5. Review team powers and duties.
(a) If the State Comptroller believes there is probable
financial stress after his or her preliminary review and any
input from the municipality under Section 8-12-4, the State
Comptroller shall establish a review team for the municipality
consisting of: the State Comptroller, or his or her designee;
the Director of the Governor's Office of Management and
Budget, or his or her designee; a member appointed by the
Senate President; a member appointed by the Minority Leader of
the Senate; a member appointed by the Speaker of the House of
Representatives; and a member appointed by the Minority Leader
of the House of Representatives. The State Comptroller may

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appoint other State officials or other persons with relevant
professional experience to serve on the review team. The State
Comptroller shall provide administrative support and other
support to a review team established under this Section.
(b) In conducting its review, the review team may:
(1) examine the books and records of the municipality;
(2) use the services of other State agencies and
employees in conducting the financial review; or
(3) both examine the books and records of the
municipality and use the services of other State agencies
and employees in conducting the financial review.
The review team shall meet with city council and employees
of the municipality as part of its review. At this meeting, the
review team shall receive, discuss, and consider information
provided by the municipality concerning the financial
condition of the municipality. In addition, the review team
shall hold at least one public meeting in the jurisdiction of
the municipality at which the public may provide comments.
(c) The review team shall submit a written final report of
its findings to the State Comptroller within 60 days following
its establishment or earlier if required by the State
Comptroller. Upon request of a majority of the review team,
the State Comptroller may grant one 30-day extension to the
60-day limitation. A copy of the final report shall be
forwarded by the State Comptroller to the Governor, mayor and
city council of the municipality, the Speaker of the House of

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Representatives, the Senate President, and each State Senator
and State Representative who represents the municipality. The
final report shall be posted on the State Comptroller's
website within 7 days after the final report is submitted to
the Governor. The final report shall identify the existence,
or an indication of the likely occurrence, of any of the
following if found:
(1) a default in the payment of principal or interest
upon bonded obligations, notes, or other municipal
securities for which no funds or insufficient funds are on
hand and, if required, segregated in a special trust fund;
(2) a failure for a period of 30 days or more beyond
the due date to transfer one or more of the following to
the appropriate agency:
(i) taxes withheld on the income of employees;
(ii) taxes collected by the municipality as agent
for another unit of local government; and
(iii) a contribution required by a pension,
retirement, or benefit plan;
(3) a failure for a period of 7 days or more after the
scheduled date of payment to pay wages and salaries or
other compensation owed to employees or benefits owed to
retirees;
(4) the total amount of accounts payable for the
current fiscal year, as determined by the State
Comptroller, is in excess of 10% of the total expenditures

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of the municipality in that fiscal year;
(5) a failure to eliminate an existing deficit in any
fund of the municipality within the 2-year period
preceding the end of the municipality's fiscal year during
which the review team final report is received;
(6) a projection of a deficit in the general fund of
the municipality for the current fiscal year in excess of
5% of the budgeted revenues for the general fund;
(7) a failure to comply in all material respects with
the terms of an approved deficit elimination plan or an
agreement entered into pursuant to a deficit elimination
plan;
(8) the existence of material loans to the general
fund from other municipal funds that are not regularly
settled between the funds or that are increasing in scope;
(9) the existence after the close of the fiscal year
of material recurring, non-budgeted subsidies from the
general fund to other major funds;
(10) the existence of a structural operating deficit;
(11) the use of restricted revenues for purposes not
authorized by law;
(12) the likelihood that the municipality is or will
be unable to pay its obligations within 60 days after the
date of the review team's final report; and
(13) any other facts and circumstances indicative of a
municipal financial emergency.

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(d) The review team shall include one of the following
conclusions in its final report:
(1) a financial emergency does not exist within the
municipality; or
(2) a financial emergency exists within the
municipality.
(e) The review team may, with the approval of the State
Comptroller, appoint an individual or firm to carry out the
review and submit a report to the review team for approval. The
State Comptroller may enter into a contract with an individual
or firm respecting the terms and conditions of the
appointment.
(f) For purposes of this Section:
(1) A financial emergency does not exist within a
municipality if the final report concludes that none of
the factors in subsection (c) exist or are likely to occur
within the current or next fiscal year or, if they occur,
do not threaten the municipality's capability to provide
necessary governmental services essential to public
health, safety, and welfare.
(2) A financial emergency exists within a municipality
if any of the following occur:
(A) the final report concludes that one or more of
the factors in subsection (c) exist or are likely to
occur within the current or next fiscal year and
threaten the municipality's current and future

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capability to provide necessary governmental services
essential to the public health, safety, and welfare;
(B) the municipality has failed to provide timely
and accurate information enabling the review team to
complete its final report; or
(C) the mayor of the municipality concludes in
writing to the review team that one or more of the
factors in subsection (c) exist or are likely to occur
within the current or next fiscal year and threaten
the municipality's current and future capability to
provide necessary governmental services essential to
the public health, safety, and welfare, and the mayor
recommends that a financial emergency be declared and
the State Comptroller concurs with the recommendation.
(65 ILCS 5/8-12-10.5 new)
Sec. 8-12-10.5. State grants. If a financially distressed
city or Authority is awarded a State grant, any moneys the
financially distressed city or Authority would be required to
match under the grant are waived unless the moneys under the
grant come from federal moneys that require the match. A
municipality's status as a financially distressed city may not
negatively impact a decision of whether or not to award a State
grant to the municipality or negatively impact the amount of
moneys received by the municipality from a State grant.

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(65 ILCS 5/8-12-21.5 new)
Sec. 8-12-21.5. Noncompliance by corporate authorities or
employees of a municipality. If a financially distressed city,
including its corporate authorities or employees, materially
violates the requirements of this Division, the Authority may
commence action in the circuit court within any county in
which the municipality is located if the Authority has given
the corporate authorities of the city written notice that
includes: a detailed explanation of the material violation; a
statement of the Authority's intention to enforce the
provisions of this Division by commencing an action; a
statement giving the corporate authorities at least 15 days to
correct the violation before the Authority may commence an
action.