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Grundy County concerned with proposed sales tax increase

Published: Wednesday, Oct. 23, 2013 5:30 a.m. CST • Updated: Wednesday, Oct. 23, 2013 1:48 p.m. CST

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Grundy County and the village of Channahon expressed major concerns with a proposed sales tax raise to help funding for local schools. 

The key issue is their income from point-of-sale businesses, which is when a business accepts sales only in a location. In Channahon in its last fiscal year it received more than $1.4 million from point-of-sales income. From Channahon’s point-of-sale income, the county received about $1.8 million or 43 percent of all its sales tax. 

The fear is if the sales tax is raised, these point-of-sale offices will leave Grundy County for another that has a lower sales tax. Channahon Village Administrator Joe Pena said according to their contracts with these point-of-sale businesses, they have the right to leave if the sales tax is raised. 

“We have to look at the big picture here and the potential it could have on our services,” said John Galloway, Grundy County Board Finance Committee chairman at a public meeting Tuesday at the Grundy County Administration Center. “If it increases by 1 percent, there is a very good chance we are going to lose a significant amount of point-of-sales.” 

Which, he said, will lead to decreased services from the county and layoffs in law enforcement, the health department and other areas of the county.  

School districts operate on income from property taxes, they currently receive no sales tax. If the facility tax was added, schools could potentially decrease their portion of property tax rates by receiving some sales tax.

“This is a viable way for us to relieve property tax payers and be able to fund our schools,” said Al Gegenheimer, superintendent of Minooka Community Consolidated School District 201. 

The local districts are in the preliminary stages of looking into a school facility tax. The proposed tax increase could be done at once, or in quarter increments, and would have to be approved by the taxpayers through a referendum on an election ballot. The schools could use the tax money for new school facility costs or for debt payments on previous facility costs. 

The proposed increase can only get on the ballot if school districts’ boards of education 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.

A public meeting was hosted by the Grundy Economic Development Council and the Grundy County Chamber of Commerce and Industry on Tuesday so school officials could receive feedback from the business community on their concerns. 

In Morris, Coal City and most of Grundy, 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 9 percent. 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. 

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 sales tax would be on items such as gas, restaurant orders and nongrocery items. But it would not be on the purchase of vehicles, boats, RVs, unprepared food, vitamins, over the county drugs or farm equipment. One of the pros for this tax has been that shoppers who are not residents would also be paying this tax and therefore not just the local residents are paying for the schools, as they are with their property taxes. 

The state has had 18 counties pass the referendum for the sales tax increase. From 2008 to 2013 there have been 41 counties that have failed the referendum during elections. There are currently 14 counties, including some that have already failed it, that are considering placing the tax question back on the ballot in March. 

In a presentation by consultants on the facility tax, it was shown that based on the 2012 data, Coal City Unit 1 School District would have received more than $2.7 million for its 2,062 students. Morris Community High School District 101 would have received more than $1.2 million for its 926 students. Morris Elementary School District 54 would have received about $1.6 million for its 1,199 students. 

If the point-of-sale revenues were removed, Coal City would have received about $1.5 million for its 2,062 students; about $675,000 for Morris High School’s 926 students and about $874,000 for its 1,199 students. 

A few businesses expressed concern at the meeting. Coal City Redi-Mix passed comments on through the Grundy Economic Development Council at the meeting stating it felt the potential increase could negatively affect its business because the local 6.25 percent sales tax gives it an advantage against other bidders for projects. 

Pena said Channahon is prepared to pass an ordinance on to the county in opposition of the sales tax increase if the schools decide to move forward with a referendum. The schools have until Dec. 30 to approve putting a resolution on the March 18 ballot.

• Note to readers: This article was updated after its initial publication to clarify a sentence regarding the proposed tax increase.

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