Grundy County school districts are doing some research on the pros and cons of asking for a sales tax raise as a funding alternative that could help alleviate property taxes.
After seeing a presentation at Reed-Custer Community Unit School District 255 and having the topic brought up from other superintendents, Superintendent Dr. Kent Bugg of Coal City Unit School District 1 asked Stifel Nicolaus brokerage firm to make a presentation to Grundy County superintendents on the Illinois County School Facility Tax.
The sales tax is an alternate funding source for school districts.
"Everyone is concerned about property taxes, and this could be an opportunity for school districts to get more diverse with the tax base by taking advantage of sales tax rather than just property taxes," Bugg said.
The school districts are in very preliminary stages of looking into the school facility tax. The tax could be a 1-percent sales tax increase at the maximum, or it could be in quarter increments, and would have to be approved by the taxpayers through a referendum on an election ballot.
The sales tax money could only be used for school facilities, such as a new building, building improvements, bond payments for buildings or parking lot work. It cannot be used for salaries, textbooks or other movable equipment or operations.
The proposed sales tax increase can only get on the ballot if school districts' Board of Educations representing at least 50 percent of the county's population approve a resolution to request the sales tax increase. If enough school boards voted in favor of it, the Regional Superintendent of Schools would then request the Grundy County Clerk to put it on the ballot.
The sales tax would be on items, such as gas, restaurant orders and non-grocery items. But it would not be on the purchase of vehicles, boats, RVs, unprepared food, vitamins, over the county drugs or farm equipment.
"Some people say it's just a tax swap, trading sales tax for property tax," said Bugg. "But the difference is people outside of the county would be participating when they shop here."
For example, if a trucker stops at "R" Place in Morris for food and gas, 1 percent of the sales tax will go back to the Grundy County schools, he said.
In Morris, the sales tax rate is 6.25 percent. If the sales tax increase was in place, it would go to 7.25 percent, which is still lower than most surrounding communities. Joliet's sales tax rate is 8.75 percent.
So even with the increase, if a shopper leaves town to shop, they are still paying more if they go to a Menards or Walmart in Joliet rather than Morris. Therefore, the tax isn't expected to hurt the Grundy County businesses, Bugg said.
The money for the school districts made from the proposed sales tax increase would go into a big pool and be distributed on a per pupil basis for students from Grundy County.
"Every student in Grundy County would benefit equally from this," said Bugg.
Based on data from the 2011-12 school year, if the sales tax had been in effect, Coal City would have received about $3.1 million for its 2,044 students. Bugg said the $3.1 million would have been more than enough for the district's bond payment for its high school addition
and early childhood center payment.
"So we could have provided about a 40-cent property tax relief, which is about $270 in relief for a $200,000 home," he said. "Or if the board chose to do so, it could also make double payments and save money down the road (by paying off the debt sooner)."
The state has had 12 counties pass the referendum for the sales tax increase. About 25 counties have failed it, including neighboring Kankakee and La Salle counties. La Salle County is discussing attempting the referendum again in April, according to the presentation by Stifel Nicolaus.
The next step for Grundy County is to discuss it with all of the school boards. A joint school board meeting will be held at 7 p.m. May 8 in the Coal City High School auditorium.
"This will be an excellent opportunity for boards of education, elected officials, the business community and interested citizens to learn more about this county schools facilities sales tax," said Superintendent Dr. Pat Halloran of Morris Community High School District 101.
Following that meeting, the school boards will discuss individually to see if they want to pursue this or not, Bugg said.
Bugg said it is the responsibility of the school boards to investigate this option to see if it is a fit for Grundy County to provide some property tax relief.
Halloran said MCHS would not be able to pay its bonds with the sales tax money because his district operates on working cash bonds that are not eligible for the sales tax money. But if his school board was in favor of this, Morris could use the sales tax dollars toward new science labs, industrial technology renovations, an elevator installation and other basic facility improvements or upgrades.
The district looked into adding an elevator previously, but the bids came in too high for the work, so the school board rejected the project about a year ago.
"There are indirect benefits to your education fund because it could help reduce our reliance on working cash bonds," he said.
Superintendent Al Gegenheimer of Minooka Community Consolidated School District 201 said he sees the sales tax option as a positive, especially for Minooka schools. When Minooka's population grew so much in the early 2000s, his district went from 1,000 students to more than 4,000. Because of this, four schools and two additions had to be completed and the taxpayers fronted the $95 million in bills.
The sales tax increase could help offset this, he said.
"With everything that happened in Connecticut, there is a need for upgrading school security systems and upgrading schools in general," Gegenheimer said. "Keeping in good shape physically is important."