New Ill. Budget Costs Local Governments

Aug 21, 2017

While finally having a state budget for Illinois is good news, there's a cost for local governments and residents. The new budget includes a sales tax collection fee of 2 per cent, meaning the state will keep some of the revenue generated by local sales taxes.

The official reason for the sales tax collection fee is to pay the state's administrative cost - of collecting the money and remitting it to local governments. Unofficially it'll help Illinois make up for its huge past due bills and big budget deficits.

Kathy Carr, Finance Director for Moline, says the new fee will cost her city 172,000 dollars a year - Moline has been using sales tax revenue for the general fund and for road construction and repairs.

"So they would have to do less projects or hope that the sales tax increases to cover that shortfall."

She's hoping new revenue from new businesses in the the city will make up for some of this loss. 

East Moline will lose about 9,000 dollars per year according to Finance Director Megan Petersen - her city also uses this money for street maintenance and repairs.

Rock Island earmarks its sales tax revenue for the general fund and its major expenses - police and fire pensions, and public works. Finance Director Stephanie Masson calls the loss of 45,000 dollars a year "frustrating."

"So when you start combining these reductions in local revenue that the state is imposing on us, it's difficult. And we are taking that into consideration as we work on our 2018 budget now."

The new fee will cost Milan 55,000 dollars a year, according to Village Administrator Steve Seivor. But the state has exempted Rock Island County from this new fee because the county's local sales tax is so small - in fact it's at the lowest level of all 102 counties in the state.