LOCAL GOV-RESTRICTED FUNDS

Illinois General Assembly - Full Text of HB5040

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Full Text of HB5040

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HB5040 - 104th General Assembly

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HB5040 Engrossed
LRB104 15537 WRO 28702 b
1

AN ACT concerning local government.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

Section 5.
Legislative findings and policy.
5

(a) The General Assembly finds that the financial
6
stability and operational capacity of units of local
7
government are critical to the public welfare.
8

(b) The General Assembly further finds that certain funds
9
received by local governments are restricted for specific
10
purposes by federal law, State law, county ordinance, or grant
11
agreement. These include tax revenues that are statutorily
12
earmarked for particular uses, such as motor fuel taxes,
13
dedicated State or federal tax dollars, and county-imposed tax
14
revenues. Garnishment, attachment, or offset of these
15
restricted funds for unrelated debts undermines the public
16
purposes for which they were intended, disrupts essential
17
services, and may jeopardize a local government's eligibility
18
to receive future grants and funding.
19

(c) It is, therefore, declared to be the policy of the
20
State of Illinois to protect restricted local government funds
21
from garnishment, attachment, or offset, except where
22
expressly required by federal law, to ensure their use for
23
their intended public purposes.

HB5040 Engrossed
- 2 -
LRB104 15537 WRO 28702 b
1

Section 10.
The State Comptroller Act is amended by adding
2
Section 21.5 as follows:

3

(15 ILCS 405/21.5 new)
4

Sec. 21.5.
Protection of restricted local government
5
funds.
6

(a) Notwithstanding any other provision of law, the
7
Comptroller shall not withhold, offset, or otherwise apply
8
against any debt any funds payable to a unit of local
9
government if those funds are restricted funds.
10

(b) For the purposes of this Section, "restricted funds"
11
means funds restricted for a specific purpose by federal or
12
State law, county ordinance, or grant agreement, including,
13
but not limited to:
14

(1) Motor Fuel Tax funds disbursed under the Illinois
15

Highway Code.
16

(2) State, county, or federal tax revenues distributed
17

to local governments that are statutorily earmarked for a
18

specific purpose.
19

(3) Tax Increment Financing revenues collected and
20

distributed under the Tax Increment Allocation
21

Redevelopment Act.
22

(4) Grants or awards received from the federal
23

government, another state, or private foundations that are
24

contractually or statutorily restricted for a specific
25

purpose.

HB5040 Engrossed
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LRB104 15537 WRO 28702 b
1

(5) State grants and distributions allocated to a
2

specific fund or purpose by law.
3

(6) Any other funds designated as restricted under
4

federal or State law or held in trust for a specified
5

public purpose.
6

(c) The Comptroller shall, on an annual basis, publish and
7
maintain a list of categories of funds deemed restricted under
8
this Section.
9

(d) Nothing in this Section shall impair the Comptroller's
10
authority to withhold or offset non-restricted funds, nor
11
shall it limit the enforcement of debts owed to the federal
12
government as required by federal law.

13

Section 15.
The Code of Civil Procedure is amended by
14
adding Section 12-701.5 as follows:

15

(735 ILCS 5/12-701.5 new)
16

Sec. 12-701.5.
Exemption of restricted local government
17
funds from garnishment.
18

(a) All funds, revenues, or accounts of a unit of local
19
government that are restricted for a specific public purpose
20
by federal law, State law, county ordinance, or grant
21
agreement are exempt from garnishment, attachment, or any
22
other legal process to satisfy a judgment or debt.
23

(b) A court of competent jurisdiction shall not issue a
24
garnishment order against restricted funds as defined in

HB5040 Engrossed
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LRB104 15537 WRO 28702 b
1
subsection (a) or as identified in Section 21.5 of the State
2
Comptroller Act.
3

(c) This Section does not apply to any collection action
4
undertaken by the federal government pursuant to federal law.

5

Section 99.
Effective date.
This Act takes effect upon
6
becoming law.

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