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Supporters of 1 cent sales tax increase say it will relieve property owners; Plenty of critics say tax payers are already tapped out

MADISON - ST. CLAIR RECORD

Saturday, November 23, 2024

Supporters of 1 cent sales tax increase say it will relieve property owners; Plenty of critics say tax payers are already tapped out

Madison County voters next month must decide whether to increase sales tax by 1 cent to help schools with capital improvement projects.

Supporters of the County School Facilities Sales Tax (CSFT) call it an alternative revenue source that shifts away from relying on property taxes for local school district funding.

Leigh Lewis, superintendent of Triad School District, said if passed the increase would generate approximately $23 million which would be distributed to districts based on their student population.

All totaled, Madison County public schools educate approximately 40,000 students. Edwardsville CUSD 7, with 7,500 students would stand to gain most of the extra revenue at $4.2 million and Venice with just 88 students would gain just $50,011 in new revenue each year.

Lewis said that in this era of budget problems where the state has not fulfilled its financial obligations to local districts, this sort of revenue stream makes sense because outside visitors would contribute an estimated 30 to 40 percent of the total.

Another benefit is that extra revenue could be used to pay down construction bonds. Lewis said that can help save on what is already being spent on high interest payments.

Since a law was passed in 2007 giving school boards the ability to place tax hikes on the ballot, 47 counties in Illinois have passed CSFTs. And, according to a fact sheet produced by the group promoting the Madison County sales tax increase – 1 Cent Makes Sense - eight counties put sales tax measures on the ballot in November 2016 and all passed.

Lewis said that 10 school boards in the county voted in support of putting the measure on the ballot, exceeding a minimum threshold of at least 51 percent support from representatives of student population. Collinsville CUSD 10 voted no; Edwardsville and Venice "remained silent" without taking a vote, she said. In all, 63.5 percent of the student population’s districts passed resolutions to put it on the ballot

While proponents say that outsiders can “help lower our property tax rates and help fund our schools,” there are no shortage of critics.

Jared Labell, executive director of Taxpayers United of America (TUA), said the sales tax referendum in Madison County is typical of others he has seen across the state where proponents can rather easily explain what their capital and infrastructure improvement needs are.

He said the problem lies in those school officials not looking at cutting “exorbitant” pensions and salaries that are “way out of tune.”

“It’s always, let’s figure out how you can raise another tax,” Labell said.

He called proponents’ argument that the sales tax will be picked up largely by visitors coming into the community, thereby lifting the burden from property owners, a “ploy.”

“It sounds good to voters who are already inclined to help with schools’ needs that ‘other people’ will pay the tax,” he said.

“But that’s just not the case.”

He said people will go elsewhere especially to pay for higher ticketed items. It happens “all the time” in the Chicago area, he added, where people will go all the way to Indiana to buy cartons of cigarettes.

“Unintended consequences is the name of the game with taxes,” he said. “People of all political spectrums will do what they can to avoid taxes. No one wants to pay them. Many believe in the ends of education – who doesn’t want good things for education or good roads. The means is the question. People will try to avoid (higher) sales taxes.”

Labell said TUA is involved in fighting other tax-related initiatives that will appear on the April ballot across the state, but has not as of yet decided to get involved in the Madison County referendum or another two separate 1 cent sales tax increase proposals in St. Clair County.

One of the most fiscally conservative voices in the Illinois Senate, Kyle McCarter (R-Lebanon), urges voters to turn down the sales tax proposals in Madison and St. Clair counties, as well as “demand a change in how government operates.”

“Illinois taxing districts are constantly asking the taxpayers for more of their hard earned money to maintain old fashioned out of date inefficient systems of government rather than responding like the private sector in a free market,” he said.

“Making government smaller and hence affordable is imperative, even if it is challenging and uncomfortable like consolidating schools and townships. Increasing sales taxes one more percent is wrong and just one more excuse for overweight government to not go on a diet.”

Failing grade in 2011

Whether Madison County voters have an appetite for increased sales tax this year remains to be seen, but four years ago, voters overwhelmingly rejected a proposed 1 cent sales tax increase by an 81 to 19 percent margin.

In 2011, $42,660 in direct contributions were made to the campaign committee set up to promote the increase – Citizens for Property Tax Relief. Among the contributors were construction contractors, labor groups, architects, asbestos abatement contractor – for the most part entities that could benefit from capital improvement projects at schools.

Additionally, $25,000 in in-kind donations were made by St. Louis-based Stifel Nicolaus, a financial services and investment banking company that in part handles bond sales for municipalities and school districts.

Stifel Nicolaus contributed polling services that were conducted six days after the election and consulting services conducted about six weeks after the election.

A commentary from the Illinois Policy Institute in 2014 cautioned voters in 14 counties facing CSFT proposals that year to be aware of “how self-interested corporations are often involved in a sophisticated effort to raise taxes on local residents.”

The article written by Brian Costin stated that Stifel Nicolaus representatives travel the state to “convince local officials to launch pro-tax hike campaigns.”

He wrote that after tax increases are passed companies such as Stifel Nicolaus seek to “gain the lucrative contracts to structure and sell school facility bonds to Wall Street.”

Ted Dabrowski, a vice president at Illinois Policy Institute, said that in general there is a lot of money to be made through public sector construction projects.

He said a bigger issue with raising sales tax when state lawmakers are already considering a $7-9 billion income tax increase is that nothing is being coordinated among the various levels of government and taxing districts.

“At some point people are going to be tapped out, then they’ll realize the true impact,” he said.

Citizens for Madison County Schools

For this year's Madison County proposal, the committee Citizens for Madison County Schools has so far just received $5,500 in donations.

Control Technology & Solutions of St. Louis, a company that specializes in renovating schools' heating, cooling, ventilation and lighting systems, contributed $4,000 this month. In 2011, the company contributed $10,000.

Another $1,500 contribution came from the Triad Education Association this month.

Lewis said that she has been involved in most of the discussions regarding the sales tax measure getting put on the ballot this year and said that Stifel Nicolaus is not at all involved in the initiative.

She said the only way in which it has been involved has been in serving as a source of statistical information on how much counties would get.

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