Sales tax increases could be answer for Rauner municipal cuts

Last year, 296 towns imposed a sales tax on top of the state’s 6.25 percent, Illinois Department of Revenue data show. That’s up from 185 towns eight years ago. And elected officials in 173 of those towns have the authority to raise sales tax rates without asking voters for permission.

sales-taxJefferson County, a home-rule community, is considering adding a one-percent sales tax increase question to next year’s ballot.

Increasing the sales tax rate is a much “easier sell” than raising property taxes because sales taxes are charged to nonresidents as well, which is why municipal sales taxes have become increasingly popular and local governments haven’t been shy about increasing rates.

Money raised by municipal sales taxes has risen 51.8 percent since 2006, while the amount all Illinois towns receive from a separate 1 percent share of the state’s sales tax has increased just 11.9 percent, according to the revenue department figures.

The extra municipal sales taxes represent 22 percent of the $4.7 billion in total sales taxes paid to counties, all Illinois municipalities, the Regional Transportation Authority and a few other local government entities in 2014.

From 2006 to 2014, the number of towns charging home-rule sales taxes increased from 134 to 173. But the highest growth came in the form of voter-approved municipal sales taxes, which were charged in 123 towns last year, up from 51 in 2006.

Some local governments may start looking at a sales tax increase as a way to cushion the blow of the governor’s proposed budget cuts that would take millions from Illinois communities. City Manager Dan Ramey has stated Centralia stands to lose $650,000 this upcoming budget year if Rauner’s cuts move forward.