Late last year, many of the area school boards started floating the idea of a 1% countywide sales tax increase to pay for buildings & maintenance within their districts. Effingham Unit 40, being the largest school district, balked at the idea. With 52% of the students in the county, the other school districts had to wait until Effingham Unit 40 was ready to vote to place the issue on the ballot. That waiting it seems has come to an end.
The proposed idea would be a “tax swap”. The county school districts will ask the county voters to pass a 1% sales tax increase in exchange for property tax relief. According to Mark Doan, Superintendent of Effingham Unit 40, the increase in sales tax would generate $5.3 million which would then be divided up based on school district population – so Effingham Unit 40 will receive 52% of the $5.3 million totally roughly $2.7 million. The rest of the money would go to the other school districts within the county.
With money being raised from the sales tax increase, the respective school boards would then lower their property tax rates. The amount saved would vary on which school district a person owned property.
What really is happening here is a TAX INCREASE, NOT A SWAP! Plus, the sales tax increase that the school districts are asking the county to pass is actually a tax on the City of Effingham!!!!
This “solution” to the budget woes of the area school districts is flawed in so many ways it’s hard to find a place to start!
1. The sales tax increase is permanent. There is no sunset to this tax increase.
2. The proposed savings on property taxes is both flawed & as reported, is a little disingenuous. First, state law says that the current school board cannot obligate or bind future school boards to honor the reduction in property taxes. Second, as reported on WXEF on Oct. 28, 2013, if your property had an equalized assessed value of $150,000 then you will see a reduction of $180 on your property taxes. This is playing with numbers. The EAV of a property is roughly 1/3rd of the fair market value. The EAV price is what is used to calculate your property tax bill. So the $150,000 quoted is actually the EAV if you own a home with a fair market value of $450,000! The way this “swap” has been discussed, it sounds like you’ll be saving lots of money but in reality, you’ll only see a $180 reduction if you own an expensive home – with many more people seeing a vastly smaller savings. Finally, Effingham Unit 40 residents will be “saving” nearly half of what other county school district residents will see yet Effingham will be the one being taxed the most (more on that further down).
3. The sales tax increase will hurt economic development in Effingham. Effingham has one of the lowest sales taxes at 6.5% in the state & as such, it helps Effingham when recruiting & retaining businesses. Plus, with the special tax district located at Kohl’s, people will be paying 8.5% sales tax (Kohl’s has a 1% special tax district rate on top of the standard 6.5% rate).
4. The sales tax increase is not a solution to the district budget woes, only a band-aid on the problem. As budget woes continue in the future, any “savings” in property taxes will evaporate as property taxes increase to accommodate the costs of public education.
5. The sales tax increase will not solve in-class budgetary problems since the sales tax increase money can only be used for buildings & maintenance. In addition, with more money & less pressure on the overall budget, teacher unions could argue for more compensation & benefits which they have allowed to erode over time due to those same budget concerns. As a result, property taxes could increase to pay for any possible costs associated with future contracts with the teacher unions. Brian Costin with the Illinois Policy Institute in an Oct. 29, 2012 article in the LaSalle News Tribune stated,
“We have found some districts use the sales tax to pay off bonds which frees up property taxes for other things such as increases in salaries & benefits. So there wouldn’t be any real property tax savings or abatement in those cases. It’s definitely possible that a teachers union would look at this as an opportunity at the negotiating table”.
6. The sales tax increase will not keep property taxes low forever. In the same article quoted above, LaSalle County passed a .5% sales tax increase to build Peru Elementary. The district’s property tax was reduced for a total of 3 years before the levy exceeded the pre-sales tax increase rate. Who is to say it won’t happen in Effingham County as well?
7. The sales tax increase will give the area school districts carte blanche to build & spend on their facilities at will without any further input from their respective district residents. When the current Effingham High School was built, it took 2 ballot tries to get it passed & it only passed the 2nd time largely due to the city of Effingham kicking in $4.1 million in TIF money to reduce the amount needed to bond out for construction of EHS. The voters will be ceding their right to check the spending of their local school districts if they pass this sales tax increase.
8. The sales tax increase could result in further reduction of state funds for area schools. How? The state could view the increase in revenues as a chance to further reduce funding for our districts since the area school districts would have an alternate source of revenue outside of state funding. There is no current state law that requires the state to continue to fund our schools at their current levels in communities where this sales tax increase has been passed.
9. The sales tax increase is such a awesomely good idea that only 8 counties have passed it out of 102 counties in Illinois! If it’s such great business sense to increase the sales tax to help fund schools, why haven’t the other 94 counties passed this great tax increase?!
10. Where is the data that shows new school buildings will spur economic development or cause people to move into Effingham County?
11. The argument that 54% of purchases are made by people outside the county of Effingham is a straw man position. It’s being used to get people to think they won’t be taxing themselves but that they will be taxing “other people”.
12. This is a tax directly on the city of Effingham itself since 88% of all sales tax in the county is generated within the city limits of Effingham. As astutely pointed out by conservative activist Stephanie Rieman & also mentioned by Commissioner Matt Hirtzel at the Nov. 19th Effingham City Council meeting, every voter within the city of Effingham could vote no on the sales tax increase & it could still be imposed upon the city by a majority of voters in the county. Must be nice to be able to tax someone else for your direct benefit.
13. How much more money does Effingham Unit 40 need? When is enough, enough? We get taxed by the federal government which pays for federal grants to schools. We get taxed by Illinois on our income to pay for schools. Lottery money supposedly pays for schools. 60% or so of your property tax bill goes to schools. When you register your kid for school, you pay activity fees, etc. The last year we registered our son & daughter at EHS, we had to pay about $500 in fees alone. All that taxation & fees for public schools & I didn’t even mention how much it costs for lunch money every week.
14. The sales tax increase is a regressive tax! The upper class can afford the extra expense of the increased sales tax on purchases & they will also see the greatest reduction in their property taxes (see point #2). The middle class & the lower class residents, who are already on tight budgets, will feel the weight of this tax the most. In addition, the lower class & lower middle class residents are more likely to rent than to own a home & therefore will not see any benefit promised by the area school district superintendents.
15. The sales tax increase will force those residents who choose to send their kids to private schools to pay even more for public schools that they don’t use. The school districts want their money though yet we can’t use school vouchers to use tax money to pay for school choice?
16. What happens if (when) Illinois forces the local school districts to handle teacher pensions? You will see your property tax “swap” disappear nearly overnight.
17. Illinois raised income taxes 67%. Now you will be asked to raise the sales tax rate by 15% from 6.5% to 7.5%.
18. How is it that all the area school districts (including private schools) have seen a reduction in number of students since 2005, yet they all need more money via a sales tax increase…on top of Effingham Unit 40′s 6.25% increase to this year’s property tax levy?? As reported by Greg Sapp at WXEF,
Doan also shared the fall housing report for the districts in Effingham County. Unit 40 enrollment is down 4% from last year and is down 13.21% since 2005. In that same period, Beecher City district enrollment is down 33% and Teutopolis district enrollment has dropped 23.4%. Dieterich district enrollment has dropped 9.6% and Altamont district enrollment is about steady from 2005.
As far as parochial school enrollment, Sacred Heart enrollment is down 27.9%, St. Anthony Grade School enrollment is down 8.4%, and St. Anthony High School enrollment is down 17.5% since 2005.
That means a drop of 15.2% in enrollment in the county since 2005.
Coincidentally, a 13.21% decrease in students over the course of nearly 10 years has not been met with a 13.21% decrease in the amount of administration or administrative salaries. Funny how you can get paid more (no figures are publicly available for Doan’s Effingham Unit 40 5 year contract though he made about $134,000 his last year at Farmington in 2011) for administering less students.
19. The most shocking part about the sales tax increase??? QUID PRO QUO. It has been communicated to myself & at least one other Commissioner via City Administration & others that we shouldn’t fight so hard against this sales tax increase because we need Superintendent Mark Doan’s help when we revisit the TIF & Enterprise Zones in the near future because Mark Doan sits on both of those boards. In other words, it has been suggested that we pull our punches because if the schools get what they want, then we will get what we want. Dirty. Dirty. Dirty.
As you can see this sales tax increase is first & foremost a tax DIRECTLY on the city of Effingham. From there, you can now see how HORRIBLE of an idea increasing the sales tax is. As an elected Commissioner on the Effingham City Council, I have to put our city residents’ needs first & keep in mind what is best for our city as a whole, now & in the future. I will not be intimidated by anyone to be quiet about this. I will not hush my voice on this issue because of some kind of “you scratch my back, I’ll scratch yours” mentality. This sales tax increase proposal is wrong, plain & simple. I will not stand watching our city be directly taxed & then watch the redistribution of wealth of tax dollars to residents outside our city. I urge you to call your school board members & demand they vote no on placing the sales tax increase on the ballot. Effingham Unit 40 is the key. If they vote for this, then the other districts can & will vote for the sales tax increase ballot.
Brian Milleville, Commissioner of Public Health & Safety, Effingham City Council
