Chicago is home to the nation’s highest sales tax among major cities, tied with Long Beach, California, with a rate of 10.25 percent.
But Illinoisans nearly 300 miles south of the Windy City could wind up paying similar rates under a referendum question on the March 20 primary ballot. The referendum will ask voters to approve a 1 percent sales tax hike to fund school construction, maintenance, renovation and other facilities costs.
In 2007, Illinois passed a law authorizing the Illinois County School Facility Occupation Tax, or CSFT. This law allows elected school boards representing a majority of the county’s student population to place a sales tax hike referendum of up to 1 percent on the ballot. Madison County school districts have placed this sales-tax hike on the ballot twice before, in 2011 and 2017, with voters rejecting it both times.
If successful, this sales tax hike would result in some Madison County shoppers paying among the highest sales taxes in the nation.
Collinsville
Collinsville sales taxes in Madison County start at a base level of 8.1 percent. That total includes the County Flood Prevention Tax (0.25 percent), a home rule sales tax (1.25 percent), the Metro East Mass Transit Tax (0.25 percent), the Metro East Park and Recreation District Tax (0.1 percent) and the state sales tax (6.25 percent).
That total rate would increase to 9.1 percent under the proposed hike.
But that’s not all. A variety of Collinsville business districts layer on additional sales taxes as well.
According to the Illinois Department of Revenue, general merchandise purchases in the following Collinsville business districts are taxed at a rate of 9.1 percent: Fournie Lane, Collinsville Crossing North, Collinsville Crossing South, I-255/Horseshoe Lake Road, Eastport Plaza Drive, Northeast and Southwest Corridors.
The new sales tax would bump up the sales tax in those Collinsville business districts to 10.1 percent. According to the nonpartisan Tax Foundation, that’s a higher rate than every major city outside Chicago and Long Beach.
Granite City
Granite City shoppers would see even higher rates.
Granite City currently levies an 8.35 percent sales tax, which includes a slightly higher home rule sales tax than Collinsville, at 1.5 percent. But two business districts jack up those rates up even higher.
The Nameoki Village Business District – stretching along the west side of Nameoki Road from Clark Avenue to Cottage Avenue – levies an additional 0.75 percent sales tax, bringing the total rate to 9.1 percent. That would increase to 10.1 percent under the proposed sales tax hike.
The Bellemore Village Business District – covering the east side of Nameoki Road from Jill Avenue to Johnson Road – levies an additional 1 percent sales tax, bringing the total rate to 9.35 percent. That would increase to 10.35 percent under the proposed sales tax hike – a higher rate than Chicago.
Lower property taxes?
Proponents of the CSFT often claim it will reduce pressure on property taxes. But that hasn’t been the case in other communities that have adopted the tax. Just ask taxpayers in Champaign.
Local school districts and the Champaign County Board promoted claims in 2009 that the sales tax hike would result in lower property taxes in 13 Champaign County school districts. But while the CSFT passed, only one of those school districts lowered property tax levies over the next five years.
The other 12 districts raised property tax levies by an average of 22 percent. And that’s on top of the new sales tax, which has taken tens of millions of extra dollars from Champaign County residents.
Cost-saving reforms
Taxpayers should be demanding change at the state level to stem the rising tide of local tax bills. One particularly relevant policy in this case is Illinois’ prevailing wage law, which mandates inflated wages on public construction projects, such as those funded by the proposed sales-tax hike.
But residents should also examine the taxing and spending practices in their own backyard.
Collinsville, for instance, diverts millions of tax dollars each year to tax increment financing, or TIF, funds, according to the city’s 2016-2017 budget.
Granite City built a $4.6 million movie theater with TIF money in 2010. The theater, which the city owns, took an operating loss of nearly $30,000 last fiscal year, according to the city’s annual financial report. The city is also planning to renew its U.S. Steel TIF District, which is set to expire.
Until local leaders get spending under control – and state lawmakers reform local cost-drivers – residents can expect to see calls for further tax hikes.