County referendum would raise Springfield sales tax burden to among nation’s highest
A proposed 1 percent sales tax for school facilities improvements would bring the city of Springfield’s combined sales tax rate to 9.75 percent – among the highest in the nation.
When residents of Sangamon County arrive at the ballot box in November, they’ll be offered the choice to implement a new 1 percent sales tax to fund school facility renovations. The hike would raise $20.8 million for schools in the county, according to the State Journal-Register, with $10.1 million going to Springfield School District 186.
Illinoisans already shoulder the highest combined state and local sales tax rate in the Midwest. Under the proposed increase, Springfield residents would pay a combined sales tax rate of 9.75 percent – among the highest in the country. But the city’s South Central Business District, home to Scheels and several restaurants along South MacArthur Boulevard, would fare even worse. Customers in that district already pay a combined 9.75 percent sales tax rate, meaning a 1 percent spike would bring that burden to 10.75 percent, surpassing Chicago’s 10.25 percent rate as the highest in the nation.
The November sales tax referendum will come on the heels of a 3.3 percent property tax levy increase the District 186 school board approved in December 2017.
Under state law, school districts can petition for a sales tax of up to 1 percent to fund school repairs and renovations. This is called a County School Facility Occupation Tax, or CSFT. If school district boards representing over 50 percent of the county’s student population approve the CSFT, it will be introduced as a referendum question on the county ballot.
Bill Yattoni of the Rochester School Board shared hopes of lowering property taxes if the referendum passes, according to the Journal-Register. While that may seem like an attractive deal to some voters, taxpayers need only look as far as Champaign County to see how easily those hopes can remain unfulfilled. In 2009, school district and county officials claimed a proposed CSFT would result in lower property taxes in 13 county school districts. But after the measure passed, only one school district followed through – the other 12 raised property tax levies.
One party involved in pushing Champaign County’s CSFT ballot measure was Stifel, Nicolaus & Co., a multibillion-dollar holding company. Stifel provides consulting services for school districts and initiates CSFT campaigns on their behalf. In the event that a CSFT referendum passes in a given county, the company then contracts with districts in that county to handle school facility bond sales. The Missouri-based company was involved in at least 12 of the 14 CSFTs passed in 2014. And they’ve had a hand in Sangamon County’s referendum as well: A Sept. 9 story by the Journal-Register shows Stifel, Nicolaus & Co. conducted a revenue analysis of Sangamon’s proposed CSFT.
Besides petitioning for an additional tax on county residents, local school districts can fund school repairs and renovations by reducing excessive employee compensation and trimming inflated administrative costs. At the state level, lawmakers must pursue additional reforms that enable school districts to control costs and avoid subjecting overtaxed residents to further tax hikes. Taxpayers should pressure state lawmakers to make constitutional changes that rein in government unions’ outsized collective bargaining power and control the growth of unfunded pension liabilities. Until then, local taxing bodies will only continue to lean on taxpayers.