Illinois village offers a blueprint for recovering from fiscal trouble

MATTESON, Ill. — A detailed case study from the Illinois Municipal Policy Journal has shed light on how the Village of Matteson overcame a severe financial crisis, offering valuable lessons for municipalities facing similar challenges. After the closure of Lincoln Mall in 2015, a key revenue source, Matteson fell into fiscal distress, reporting a $5.4 million budget deficit in 2013. However, by 2023, the village had transformed its finances, boasting a $21.4 million General Fund balance.

The case study identifies a mix of cost-cutting measures, revenue-raising strategies, and long-term planning as key factors in Matteson’s recovery. It also highlights how achieving home rule status and attracting major businesses helped the village build a sustainable economic foundation.

A Rocky Start: Early Attempts to Save

When the village began to struggle financially, it responded by cutting costs and delaying investments. In 2009, Matteson laid off 26 employees and drastically reduced spending on infrastructure projects. However, these early efforts proved insufficient, and by 2013, the village reported more than $28 million in expenses against $23 million in revenue​.

Emergency Measures: New Taxes and Fees

As the crisis deepened, Matteson implemented several emergency measures to increase revenue. The village introduced a business district tax in 2013, focused on areas like the Lincoln Mall site, and raised property taxes over time. By 2015, it had also enacted a 1% eating tax on restaurant meals and imposed higher fines, permit fees, and penalties​.

These measures stabilized revenues and allowed the village to address immediate needs, but residents and officials knew deeper reforms were necessary.

Turning the Corner: Home Rule Status

In 2022, Matteson achieved home rule status through a local referendum. Home rule granted the village broader autonomy to manage its finances, including the ability to impose taxes and make financial decisions without requiring state approval. This shift allowed Matteson to replace certain taxes, introduce a new sales tax, and restructure its revenue streams more effectively​.

Home rule also enabled the village to focus on long-term economic development. Tax incentives attracted businesses like an Amazon fulfillment center, which brought over 1,000 jobs and at least $2 million annually in tax revenue. A cannabis cultivation facility, Sam’s Club, and other developments further diversified the local economy​.

Innovative Reforms and Future Planning

By the time Matteson entered its recovery phase, it had adopted more innovative financial practices. These included improved transparency in budgeting, long-term financial planning, and the creation of special districts like Tax Increment Financing (TIF) areas to support business growth. Between 2022 and 2023, the village’s total revenues increased by 13.8%, driven by new taxes, service fees, and the success of its economic initiatives​.

Lessons for Other Municipalities

Matteson’s journey offers valuable lessons for towns facing similar challenges. According to the case study, successful recovery requires a mix of immediate revenue-generating measures, economic diversification, and transparent financial management. While fiscal distress can be overwhelming, proactive decisions like adopting home rule status and incentivizing business development can set the foundation for long-term stability.

Although Matteson’s outlook has improved, the village continues to monitor its finances carefully, focusing on sustaining municipal services and adapting to future challenges​.

Find full case study here.