TAX NEWS - June 2010

Illinois Tax: Montgomery County to vote on school sales tax in November

HILLSBORO — Montgomery County will hold a school sales tax referendum Nov. 2, after the county board this week unanimously approved placing the issue on the fall ballot.

Sangamon County is among other counties that also are considering school sales tax referendums. Only five of the 21 Illinois counties that have previously asked voters to enact such a tax have passed it.

Proceeds from the 1 percent tax could be spent only on school facility upgrades, repairs and new construction.

"I don't have an opinion about its chances here. If you look at it from a historical point of view, it's odds aren't good," said Mike Plunkett, chairman of the Montgomery County Board and editor of the Hillsboro Journal-News. "But any mechanism other than property taxes is better than property taxes, a horrible way to fund schooling."

For a county board to agree to hold a school sales tax referendum, school boards representing a majority of students in that county first need to pass resolutions supporting it.

In Montgomery County's case, all four school districts are for it.

The Hillsboro School District — the largest, enrolling about 40 percent of the students in Montgomery County — stands to gain nearly $1 million a year in sales tax revenue if the ballot question passes. (The Springfield School District estimates it would receive about $10 million a year).

Hillsboro School Superintendent David Powell said if voters approve the tax, the district could lessen property taxes for district residents and use the funds for significant high school upgrades, if not to build a new school. Voters last fall defeated a proposal to increase property taxes to build a new high school.

"We're in a situation with a desperate need for our high school," Powell said. "That would certainly be the primary use of this 1 percent sales tax."

Powell said sales tax revenues would be used to partially offset property taxes. After speaking with several voters, he's optimistic.

"It's going to find a welcome audience," he predicted of the referendum.

Other than Montgomery County, no other counties appear to have a school sales tax referendum on the ballot yet for this fall, according to James Russell, associate executive director for the Illinois Association of School Boards.

In addition to Sangamon County, Knox and Iroquois counties are debating whether to hold one. Iroquois County voters defeated an earlier attempt.

All Sangamon County have endorsed a call for a fall vote on the tax and are waiting for the county board's consent. County boards have until the end of August to decide, according to the Illinois State Board of Elections.

The Illinois General Assembly created the school sales tax in 2007 as a way for counties to shift part of the burden of education funding from property tax payers. The sales tax can be increased by quarter increments up to 1 percent and applies to general merchandise. However, such items as cars, boats, mobile homes, drugs and groceries would be exempt from the tax.