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Sales tax growth flattens, but cities want their share partially restored

Wednesday, Nov 29, 2017

* From the Illinois Policy Institute’s news service

Cities across Illinois are banding together in an effort to block the state from keeping so much of their sales tax revenue.

Part of the new budget imposed by lawmakers over the governor’s veto is a two percent fee to manage local sales taxes.

The city of Springfield faces mounting pension debt that’s eating up most, if not all, of its share of property taxes. Springfield has seen little growth in sales taxes and now the state is eating up a chunk of that with a 2 percent fee it charges cities to administer sales taxes.

Springfield City Budget Director Bill McCarty said the fee means the city loses out on $800,000 in sales taxes.

“Let’s call it what it is, it’s a surcharge,” McCarty said. “And we’re balancing the state’s budget on the backs of local governments.”

McCarty joins the Illinois Municipal League in pushing for House Bill 4101 that would cut the fee in half.

The Illinois Municipal League lists the bill as key for its members, saying in a policy paper there was no real opportunity for discussion or debate of the fee before it was implemented over a gubernatorial veto. IML also said state law doesn’t allow municipalities to collect their locally imposed sales taxes themselves.

Probably not fair, but something had to give somewhere.

The bill, by the way, has just one sponsor.

* Meanwhile, from the Illinois Policy Institute’s news service

Other sources from taxes on sales, public utilities, cigarettes, liquor, vehicle use and insurance are either flat or down from the year before.

“I would say the sales tax being up less than 1 percent kind of signifies we’re in a low growth period, which we have been in the last few years,” [Illinois Commission on Government Forecasting and Accountability (COGFA) Revenue Manager Jim Muschinske] said.

- Posted by Rich Miller        

8 Comments
  1. - Anon - Wednesday, Nov 29, 17 @ 1:28 pm:

    Cities can also use this as an opportunity to make sure business operating within their boarders are properly registered with the state and become more active in reporting local businesses that are out of compliance.


  2. - Ron - Wednesday, Nov 29, 17 @ 1:33 pm:

    Sad. Horrible business environment and shrinking population will do that though.


  3. - Anon - Wednesday, Nov 29, 17 @ 1:45 pm:

    ===Sad. Horrible business environment and shrinking population will do that though.===

    Sangamon County is home to many thousand of state employees, vendors, and contractors. The state has paid billions of dollars late and the Rauner Administration has refused to grant the satisfactory performance increases that are required under statute and recently lost an appeal over that issue.

    I would imagine late payments for services rendered along with the decreasing buying power of many thousands of workers in Sangamon County have more of an impact than whatever this “horrible business environment” is supposed to mean.


  4. - Cheswick - Wednesday, Nov 29, 17 @ 1:53 pm:

    If there is a horrible business environment it was engineered by Rauner and his failures.


  5. - Ron - Wednesday, Nov 29, 17 @ 2:25 pm:

    Cheswick, Illinois has had abysmal job and GSP growth far longer than Rauner being in office. Get your head out of the sand.


  6. - Honeybear - Wednesday, Nov 29, 17 @ 2:57 pm:

    “Shrinking population” like the 72,000 college students who left Illinois schools? They didn’t leave because of Madigan. They left because of the uncertainty caused by a two and a half year budget stalemate by hostage taker Rauner.
    Oh and Ron Illinois still has the 5th largest GDP in the country
    It’s growth or lack has more to do with our industry diversification, as opposed to people leaving.
    People leaving states because of taxes is a myth
    And Koch funded think tanks and studies
    Are not peer reviewed.
    All an economist has to do is skew the assumptions that go into a REMI model and shazam you can support any policy or argument.
    That’s why I can’t stand economists.
    A perfidious profession the lot of them.
    But luckily we have Kansas
    And Louisiana
    To show us the folly and
    Perfidy of supposed good “business environments”
    Get your head out of your tookus


  7. - Cheswick - Wednesday, Nov 29, 17 @ 3:16 pm:

    Ron, see Anon @ 1:45 pm for the effects of Rauner’s failures in Sangamon County.


  8. - IMissBentohs - Wednesday, Nov 29, 17 @ 3:54 pm:

    When I took the job as CFO, GOMB asked me one question which I had to write a paper and return the next day.
    It explained how the State is overpaying to the Municipalities and if I side with the State and that Municipalities should get less.
    Maybe some of the Cityfolk should try to become Statefolk?


Sorry, comments for this post are now closed.


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