Two quarter of a percent sales taxes won’t be going anywhere anytime soon after the Carbondale City Council voted to take off the sunset provision on taxes from 1999 and 2014.
The council considered two different taxes and voted in the same manner on both issues. Each decision was a 4-3 vote in favor of keeping the taxes. Council members Jessica Bradshaw, Jeff Doherty and Navreet Kang voted against the measure.
On Feb. 2, 1999, the council approved an ordinance raising the sales tax a quarter of a percent. The tax at the time was to provide additional revenue to fund what is now the Carbondale Community High School on East Walnut Street. The school issued $16 million in bonds to finance the project and the city pledged the proceeds of the quarter of a percent tax to provide annual payments of about $800,000.
As part of that ordinance 18 years ago, it directed the council to repeal the tax once the CCHS bond was paid in full, which it will be in October 2017. However, Carbondale City Manager Gary Williams said it is the opinion of city staff that a seated council doesn’t have the legal authority to direct a future council to take specific action.
Kang said the council made a promise to voters in 1999 and it should stick to it.
“If we don’t keep that promise, then we are violating that promise we made to the public that we will use the funds judicially when we took this office,” he said. “I would like to see that we hang on to the promise and repeal both of these and if we need to we can re-impose the tax.”
On March 25, 2014, the council approved another ordinance imposing another quarter of a percent tax. Williams said this tax was to combat the potential loss of state revenue the governor’s office and legislature were considering at the time. The ordinance also contains a sunset provision terminating the tax on January 1, 2018.
Williams said each quarter of a percent tax generates about $1,023,000 annually for revenues. The current budget was balanced with the assumption each of the taxes and the revenues would continue. Williams said the loss of one of the taxes could mean a budget shortfall of about $321,092 in Fiscal Year 2018. He said if the tax were to be repealed, it would mean additional cuts to personnel and/or services to make up for the difference.
Doherty said the council should take a look at the overall financial situation of the city.
“I feel it is important that we look at all of our revenues from sales tax and even property tax,” Doherty said. “The food and beverage tax as well as the package liquor tax generates about $2.2 million a year. A big chunk of that goes to police and fire pensions. That leaves about $1.4 that is more or less discretionary funds.”
Doherty said he knows there has been discussion about capital improvements prior to his tenure on the council, but he said before he could consider extending two quarter of a percent sales taxes, there should be an analysis of all the revenues from sales taxes and property taxes.
“Also, look at the expenditures and allow the City Council to set its priorities of what kind of services it wants to provide and what types of projects it wants to do in the local improvement fund, and then once we set those priorities establish whether or not there is a need to further these quarter-percent sales taxes,” he said.
Carbondale Mayor Mike Henry said he feels the council did decide what its priorities were when it adopted its budget earlier this year.
“We talked about this since January of this year that we would need to keep these two quarter percent taxes. This is no surprise,” he said. “The things we are trying to do is to catch up with previous councils and administrations putting off things that needed to get done.”
He referenced Mill Street and Freeman Street and the condition of those roads. He called them “shameful.”
“They just look like they are in benign neglect,” he said.
Henry said the current council realizes it has to make Carbondale a place where parents want to bring their students and leave them to attend SIU for 4-5 years.
“That is what we are with everything we are doing now,” he said. “Trying to help this great university stop the decline in enrollment and hopefully grow some of it back.”
Henry announced openly he would vote to keep the taxes before the council voted. However, he said he wouldn’t be averse to looking at the food and beverage and package liquor taxes in the next budget season. He said the two, quarter of a percent sales taxes have been in place already and are not adding anything.
“What people need to be upset about is this one-percent county tax that was passed,” he said.
Henry is referring to the County School Facility Occupation Tax, which will impose a one-percent sales tax increase on July 1. The funds from the tax will be distributed throughout Jackson County based on student population. The tax was approved by a voter referendum in November.
Councilman Loos said if the council were to let those taxes sunset, there would be $2 million not coming into the city’s coffers and the council would have to make it up.
“We can do that through cuts to the budget or other sources of revenue or through a mix of those,” he said. “It would be catastrophic to cut this budget by $2 million dollars. And there is no other source of revenue that would make up for these.”