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Du Quoin schools may seek new 1% facilities sales tax

Posted October 17, 2014 9:00 am

John H. Croessman

Du Quoin Community Unit District 300 Supt. Dr. Gary Kelly is asking his Board of Education to support a resolution for something called an Illinois School Facility Occupation Tax to be placed on the April 2015 election ballot.

If school districts in any combination with 51 percent of the enrollment in the county concur it would raise sales tax across the county by between one-quarter of a percent (.25) and 1 percent to fund 1.) building repairs or construction and 2.) could be used to abate a portion of the real estate tax we pay.

The board listened to the proposal for the first time Thursday night, but did not vote on it.

The revenue would go back to the schools and be divided based upon enrollment.

Du Quoin-area shoppers already pay an 8.25 percent sales tax on goods purchased downtown and 8.75 percent at businesses along Rt. 51 south after this year's implementation of a city-supported half-cent economic development tax. That tax is being used to help support the new Bottom Dollar grocery and the GM-invoked remodeling of Chip Banks Chevrolet.

Here's how the current 8.75 percent tax breaks down:

• 5 percent goes to State of Illinois.

• 1 percent goes to City of Du Quoin.

• .25 percent (quarter percent) goes to Perry County.

• 1 percent is Du Quoin's home rule sales tax.

• .50 percent (half percent) sales tax is being used to retire Du Quoin District 300's share of local bonds on new high school.

• .50 percent (half percent) sales tax for county public safety.

• .50 percent (half percent) Du Quoin business development tax (applied to sales from businesses on Rt. 51 south of East Franklin Street)

Total: 8.75 percent in Sales Tax

Voters will have to decide if its a legitimate way to offset shortfalls in state funding or is it simply a game of "guess which hand it's in."

The law says the sales tax can be used to abate (lower) real estate tax.

Voters will remember late Mayor John Rednour doing that five years ago with the promise that a one percent sales tax would forever abate (eliminate) local residents' share of real estate tax.

At the time, it was an honest goal.

But, four years into the promise the city grew its personnel costs and the attached pension liability so that it has since been unable to abate the levy. Taxpayers are paying BOTH the real estate tax and the sales tax.

Dr. Kelly makes the case that the city's TIF (Tax Increment Financing) districts have parked any natural growth in assessed valuation and the real estate taxes tied to those assessments. What the law says is that from the year the TIF was created going forward, any money generated beyond what the district got at the time the TIF was created goes, not to the school, but instead into an economic development fund. It is those TIF monies that are creating the funds for downtown Du Quoin development.

Dr. Kelly also makes the case that the state's shortfall in school funding is now well over $2 million.

Dr. Kelly says the district will be faced in the near future with putting a new roof on Du Quoin's elementary and middle school.

But, it's a "new" school?

His response: It's a 15-year-old school and the cost of a new roof will approach $1 million.

The bonds on that building will be paid off in 2019. Can't we simply refinance the tail-end of those bonds to pay for a roof without another tax.

His response: "We could."

He also makes the case for using the tax to replace part of the district's real estate tax levy.

Maybe.

But, historically it takes every dollar municipalities and schools can get their hands on to operate. And, they aren't bashful about taxing and levying, particularly where payroll and pension preservation come into play.

Williamson County voters approved this same tax three years ago because it desperately needed to build schools or improve buildings.

The schools are built and school construction is behind us in Du Quoin and Pinckneyville.

Something else that is going to make this a tough sell is the already "give 'til it hurts" support of the school district by the community: Two new schools in 15 years, support of the Education Foundation, unbridled administrative pay hikes and attached pension support and, most recently, the Indian Pride Weekend for district athletics is already a lot to ask in this economy.

The law creating this sales tax was designed to assist counties in dire straits with respect to the infrastructure of their schools.

Budget problems still tend to get down to one thing: Spending problems.

If school boards across the county collectively seek this referendum, the paperwork has to be to County Clerk Josh Gross by the end of the year to be placed on the April ballot.

In other action, the board accepted the resignation of math instructor Rhonda Jones effective Dec. 31, 2014.

Supt. Kelly had scheduled a review of the state's district report card for the past year, but that has been postponed until November because copies of that report are not yet in the hands of the district office.

Don Hoffman of the accounting firm of Emling & Hoffman gave an overview of the district audit for last year. It is largely a very clean audit.

About The School Facility Occupation Tax

What is the County School Facility Occupation Tax?

The corporate authorities of a county, except Cook County, may impose a tax upon all persons engaged in the business of selling tangible personal property at retail (retailers’ occupation tax) and upon all persons engaged in the business of making sales of service, who, as an incident to making those sales of service, transfer tangible personal property in that county (service occupation tax). This tax is referred to as the County School Facility Occupation Tax. The Illinois Department of Revenue is responsible for administering this tax.

Are there kinds of sales that are not subject to this tax and that will not generate additional revenue?

Yes, the county school facility tax does not apply to the sale of: tangible personal property that is titled or registered with an agency of this state’s government, (e.g., cars, trucks, boats, motorcycle, trailers, snowmobiles, aircraft), or food for human consumption that is to be consumed off the premises where it is sold (other than alcoholic beverages, soft drinks, and food which has been prepared for immediate consumption) and prescription and non-prescription medicines, drugs, medical appliances and insulin, urine testing materials, syringes, and needles used by diabetics.

Do any restrictions exist on how counties can use the collections from this tax?

The revenue generated is to be used exclusively for “school facility purposes” in that county as defined in the statute.

Is voter approval required before implementation?

Yes, the corporate authorities of the county must have voter approval in order to establish a County School Facility Occupation Tax.

What steps must be taken to establish this tax?

Upon either: 1.)a resolution by the county board or 2.)a resolution by school district boards that represent at least 51 percent of the student enrollment within the county, the county board must certify the question of whether the county shall impose this tax to the proper election authority, who submits the proposition at an election in accordance with the general election law. If a majority of the electors voting on the proposition vote in favor of it, the county may impose the tax.

What tax rate can be imposed?

The County School Facility Occupation Tax may be imposed in ¼ percent increments and may not exceed 1 percent.

What action is required after voter approval?

The county must: 1.) adopt a proper ordinance to impose the tax, 2.) file a certified copy of the ordinance that imposes the tax with the Illinois Department of Revenue, and 3.)file certified election results with the Illinois Department of Revenue.

What is the deadline for filing an ordinance?

If the county has filed a certified copy of a proper ordinance and certified election results with the department on or before: April 1, the tax rate will take effect July 1 of the same year, or Oct. 1, the tax rate will take effect Jan. 1 of the following year.

Can this tax be discontinued or changed?

Yes, the county board may, by ordinance, discontinue or lower the rate of the tax. Note: If the county board discontinues or lowers the rate of tax, a referendum must be held in order to increase the rate of tax or reimpose the discontinued tax.

When will the county receive its first tax collection?

For taxes imposed effective Jan. 1, the first disbursement will be made to the Regional Superintendent of Schools during the following April. For taxes imposed effective July 1, the first disbursement will be made to the Regional Superintendent of Schools during the following October.

55 ILCS 5/5-1006.7

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