WILL COUNTY SHOPPERS WOULD PAY AMONG NATION’S HIGHEST SALES TAXES UNDER REFERENDUM PROPOSAL

from Illinois Policy

A new sales tax proposed by Will County school districts would put some residents’ sales tax burden in a league with Chicago, which is home to the highest combined sales tax rate of any major city in the U.S.

Illinois is home to the highest sales tax rates in the Midwest and one of the highest overall tax burdens in the nation. But that hasn’t stopped some local officials in Will County from entertaining additional taxes.

Will County voters could be seeing a referendum on their November ballots that would bring a new 1 percent sales tax to county school districts. Indian Prairie District 204, the latest Will County school to push the referendum forward, passed a resolution July 23 in support of the proposed sales tax. More than a dozen school districts across Will County have also signed onto the referendum, according to the Naperville Sun. The proposed 1 percent tax would fall under a relatively new category of sales tax called a County School Facility Occupation Tax, or CSFT.

An additional 1 percent sales tax might seem insignificant. But on top of state and local sales taxes – as well as sales taxes tacked on by special business districts – the region’s combined sales tax burden would rival that of Chicago in some areas.

Take either of the special business districts in Joliet, the county’s seat. For residents shopping at Route 66 Food N Fuel or Mickey’s One Stop, located in Route 53/Laraway Road Business District and 1415 Plainfield Road Business District, respectively, the sales tax rate would jump to 10.75 percent from 9.75 percent, provided the CSFT went into effect. This would outpace Chicago’s combined sales tax rate of 10.25 percent, which is the highest overall sales tax rate in the nation.

But the tax wouldn’t be restricted to shoppers visiting special business districts. Joliet would see a combined sales tax rate of 9.75 percent under the additional sales tax, up from 8.75 percent. Not far behind would be residents of the villages of Bolingbrook and Plainfield, both of which currently impose an 8.5 percent combined sales tax. The proposed CSFT would push this rate up to 9.5 percent, which, while slightly behind Chicago’s high sales tax rate, would nonetheless render the villages’ combined sales tax rate among the highest in the nation. (The portion of Bolingbrook located in DuPage County would not be affected by the new tax.)

In 2007, state lawmakers passed a law authorizing elected school boards to introduce a CSFT via referendum. The tax would be placed on retail items and gasoline, the revenue from which would be earmarked for facilities maintenance, upgrades and debt repayments.

In order for a CSFT referendum to appear on voters’ ballots in a given county, school districts representing at least 50 percent of that county’s student population must pass resolutions approving the proposed CSFT.

Around 70 counties have put CSFT referendum questions to voters, but none in Cook or the collar counties, according to the Naperville Sun. But that could change come November. Jay Strang, District 204’s chief school business official, told the Naperville Sun that Will County school districts were “very close” to surpassing the 50 percent requirement.

While CSFTs come with the promise of investment in local schools – a promise local taxpayers are justified in favoring – the unintended consequences of CSFTs can worsen the problems they’re designed to solve. In fact, CSFTs end up masking accountabilityfor district officials’ spending decisions. Despite reporting “much-needed deferred maintenance,” District 204 officials have suggested the tax could be used to pay down debts, only appropriating remaining funds toward maintenance and safety-improvement projects.

A 2014 Illinois Policy Institute investigation found Stifel, Nicolaus & Co. – a Missouri-based company – is often behind persuading local officials to pursue CSFTs. The company benefits from CSFTs by offering free consultation to school boards seeking more money for their districts. Then they make a pitch to handle the lucrative bond business for the ensuing projects funded by the sales tax hike.

School districts are the largest recipients of local property tax revenue. The owners of a home located in Joliet priced around the city’s median value of $180,600 paid $4,545 in property taxes in 2017. Combined, the homeowner’s two local school districts took in $3,071 of that ­– more than 67 percent of the property taxes billed.

Implementing a CSFT would only worsen Will County’s already-high overall tax burden. Unfortunately, costly mandates imposed by Springfield and the Illinois Constitution too often put local school districts in a bind, which feeds their reliance on tax hikes. Lawmakers must introduce real fiscal reforms – including constitutional changes to laws governing pensions and collective bargaining power – that would empower school districts to control their finances, rather than continuing to lean on overtaxed residents.