TAX NEWS - 2010

Illinois Tax: Springfield City sales tax income rises for second month in row

Some good budget news came out of Springfield city hall Wednesday: Sales tax receipts for April were higher than expected for a second month in a row.

The new figures also showed improvement in City Water, Light and Power's payments to the city in lieu of taxes for June, but they were still about 2.6 percent below estimates.

The increased revenues reduced the city's current budget shortfall by more than half, to about $109,000. But officials cautioned it's too early to say whether the improvement is a trend.

"We're encouraged by the two months of positive increases in the state and city sales taxes," said Jim Donelan, executive assistant to Mayor Tim Davlin. "We'll continue to monitor this on a daily basis."

For city employees to avoid taking additional furlough days or concessions after August, revenues will have to run $1.2 million in the black, Donelan said.

Currently, they're $109,124 in the red.

Only two months of sales tax revenue are available for the city's current fiscal year, which began March 1.

City sales taxes showed increases of 12 percent for March and 8.2 percent for April (those funds were received by the city in June and July, respectively). The city's portion of the state sales tax was up 6.4 percent in March and 5.3 percent in April.

Those increases are helping offset declines elsewhere, particularly in the city's share of the state income tax, which fell about 5 percent below budget estimates in March and April, then dropped to about 20 percent below estimates in both May and June, according to data posted on the city's website.

City budget analysts aren't sure what to make of the sudden drop.

The city's spending plan calls for nearly all its revenues to stay flat compared to last year, except for the income tax, which the city estimated would increase by 2 percent.

Dallas Whitford, division manager in Springfield's office of budget and management, said the general consensus when the budget was put together was that unemployment had hit an all-time high and would improve, boosting income tax revenue as a result.

Adding to the city's financial woes is state government's budget crisis.

Springfield hasn't received an income tax payment since January, though city officials are counting on eventually receiving the money — a total of more than $4 million.

"The entire state budget is up in the air," said Ken Crutcher, the city's budget director. "I don't think any municipalities know what they're going to do and when. Everyone's sitting around waiting with bated breath to see just how far in the state is."

City officials hope to have a clearer picture of the financial situation by next month.

Most city union agreements, which were approved earlier this year, call for employees to take six furlough days during the first six months of the budget year. The agreements also allowed for a review of the city's financial situation in August to determine if additional furlough days or layoffs will be needed after Sept. 1.

Seventeen Springfield police officers were issued layoff notices last week. They could be without jobs on Sept. 1. The pink slips were issued to meet a 60-day notice requirement in the city's contract with Police Benevolent and Protective Association No. 5.

City officials will begin assembling recommendations for the next budget year in mid-August and early September.

"Under these circumstances, forecasting what is going to occur on the revenue side is extremely sensitive," Crutcher said. "There are those out there who are saying we're just at a little small plateau, and there's farther down to go.

"We have to be careful and watch and be as conservative as we can, which is what we try to do."