Increasing A Municipality's
Allocation Of Motor Fuel Tax Revenues

By ANDREW T. FREUND
Zukowski, Rogers, Flood & McArdle, ©1992

An important part of the total revenue base of each municipality is the revenue collected directly by the State and then re-apportioned to the municipalities based upon each municipality's total population. These "state-shared" revenues include (1) regular income tax, (2) income tax surcharge, (3) motor fuel tax, (4) photo processing sales tax, and (5) state use tax.¹

A municipality's population figures are automatically adjusted every 10 years when the Federal Bureau of the Census undertakes its regular census. When the new census figures are compiled, the Bureau of the Census certifies the new population figures to the Index Department of the State of Illinois. From there, new allocations are calculated for each municipality.

However, when a municipality experiences significant growth between the regular federal census dates due to annexations of surrounding property, there is a need to update the population figures of that municipality so that the allocate portion of the state-shared revenues may be properly increased. With respect to regular income tax, income tax surcharge, photo processing sales tax, and state use tax, the only way to adjust a municipality's population figures, and thereby increase its allocation of state-shared revenues, is to retain the Federal Census Bureau to undertake a special census. A special census is performed in the same manner as a regular census with special census takers actually going house-to-house to tally the census. Once the census is complete, the Federal Census Bureau will certify the new population figures to the State Index Department where new allocations will be calculated.

A special census, like a regular census, is a costly and time consuming process. The estimated cost of a special census for a municipality with a population of 3,500 is approximately $14,000. In addition, the Federal Census Bureau takes approximately nine months from the time the Bureau receives a formal request to perform a special census to certify new population figures to the State Index Department.²

With respect to motor fuel tax funds, however, there is an exception to the requirement that a special census must be undertaken by the Federal Census Bureau in order to increase a municipality's allocated share of motor fuel tax revenue. The Illinois Department of Transportation has promulgated regulations which allow a municipality to undertake its own census and to certify the new population figures directly to the Department of Transportation. The regulations provide that if new territory has been annexed since the last federal census was taken and the municipality desires to have its allotment of motor fuel tax funds increased as a result of this fact, the municipality must take a census of the annexed territory. The municipality is required to submit three forms to the Department of Transportation: (i) BLR-2100, an ordinance providing for the taking of the census; (ii) BLR-2101, an affidavit (executed by the municipal clerk and attached to BLR-2100) certifying to the passage of the ordinance; and (iii) form BLR-2102, an affidavit (signed by the municipal clerk and president or mayor, and attested to by a notary public), identifying the date of the census and the population contained in the newly annexed area. This process is relatively simple and inexpensive.

Procedurally, for motor fuel tax purposes, the municipality must first adopt an ordinance authorizing a special census within the municipality (form BLR-2100). This ordinance must contain a provision appointing a census taker for the municipality who will be responsible for the actual taking of the census. The municipality must also prepare a certification for the ordinance in the form prescribed by the Department of Transportation (form BLR-2101). Once the ordinance has been adopted, the municipality undertakes the special census of the annexed territory. Once the census has been completed, the municipality must prepare the "Affidavit for Municipal Annexation" which describes the annexed territory and certifies the population within the annexed territory (form BLR-2102). This form is to be signed by the designated census taker. It is also recommended to have an affidavit and report describing the method by which the census was taken

August 1992 / Illinois Municipal Review / Page 11

signed and sworn to by the person or persons responsible for the taking of the census. This affidavit, however, does not need to be submitted to the Department of Transportation, but should be retained in the municipal records.

The Department of Transportation does not specify, or require, that any certain type of census be performed for purposes of increasing a motor fuel tax allocation. Thus, a municipality may take a physical count of the population in the annexed territory or it may perform its own form of an office separation. (See Footnote No. 2). The information necessary to undertake an office separation type census of the annexed territory is available from several different sources. For example, census track map information is usually maintained by the county clerk or county planning department. Census information and census track maps may be prepared by regional planning commissions throughout the state. This information is also often available from a political party's headquarters as such population information is used for purposes of redistricting.

Once the ordinance for municipal census (form BLR-2100), the certification of the ordinance (form BLR-2101), and the affidavit for municipal annexation (form BLR-2102) have been properly prepared, a municipality must submit them to the Department of Transportation along with a written request for an increase in its motor fuel tax allocation based upon the figures contained in the forms. The Department of Transportation will make the new allocation retroactive to the beginning of the month in which all of the forms were properly submitted to the Department. This whole process can be accomplished in as little as 30 days, depending on the availability of the census information. Further, because members of a municipality's staff may be used to perform the census, the cost of such procedure is minimal.

Statewide, motor fuel tax funds represent almost 25 percent of the total state-shared revenues received by a municipality. This constitutes an important source of revenue for a municipality. Moreover, with the passage of the Property Tax Extension Limitation Act on the collar counties, the need to quickly and efficiently increase a municipality's revenue base has increased in importance. Thus, a municipality has much to gain by using this method to increase its fair share of motor fuel tax funds allocated by the state. •

2. In the past, the Federal Census Bureau has certified population figures to the Index Department based on a procedure known as an "office separation". Under this procedure the Federal Census Bureau estimates the population of a newly annexed territory by reviewing the Bureau's latest census information contained on census track maps. As indicated by its title, an office separation is performed by the Federal Census Bureau at its headquarters in Washington, D.C., and does not require the actual physical taking of the census at the municipality level. As a result, an office separation is a faster and less expensive method of certifying population figures to the State Index Department. However, at the time of publication, the Federal Census Bureau was not offering to perform office separations.

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