1% sales tax information provided ahead of election
By then, Pontiac residents should have all the information at their fingertips regarding the proposed 1% sales tax referendum when Tuesday’s primary election rolls around. But if they have any questions, the series of town hall meetings planned by the city are now over.
The last of the seven rallies took place Thursday afternoon at the Eagle Theater. City Administrator Jim Woolford and Aldermen Kelly Eckhoff and Don Hicks were present from the city to explain the referendum and answer questions.
While there were about 20 residents who had collectively attended the previous six meetings, there were none at the last one. That didn’t stop city government officials from explaining one last time what sales tax is, why it is, and how the money generated from it will be used.
This is the same information that has been made public before, including where the money is expected to be generated from and what the city plans to do with it to improve the community.
The main reason for the sales tax is to raise money to fix the streets. Woolford explained that the money the city has available each year right now just isn’t enough to do the job.
He said one of the main questions asked by property owners is why this is necessary since they pay property taxes every year. Woolford explained where that property tax money goes, per state requirements. Of the taxes collected, 65% goes to school districts. In the Pontiac, this means PTHS Dist. 90, PGS Dist. 429 and Heartland Community College.
He pointed out that, based on a land value of $150,000, about $770 went into the city’s general fund account for operations. Of that, 90 percent of the general fund goes to pension funds (police and fire as required by the state), liability insurance, and the library. Insurance and library money are fairly minor, Woolford noted.
The remaining 10% are discretionary funds, which cover administration, cemetery, public works, fire, police, recreation and ambulance services.
There is another source of income that is directed to the streets. It’s the fuel tax. Woolford said if there was no gas sold in Pontiac, the city would still receive $470,000 from the state. If Pontiac sold all the gasoline in the state, it would still receive $470,000 from the state.
The federal urban aid money received is $190,000, giving the city $660,000 a year to repair streets.
The cost of street repairs ranges from $50,000 to $150,000 (depending on work in progress) per block.
This means that the city will not have the money to repair the streets in a timely manner without having to have them repaired again. For example, South Division Street from Lincoln to Torrance could be fixed, but it will have to be fixed again before the rest of the streets in the city can be fixed and a vicious cycle has been created.
Hence the need for the sales tax to generate enough money to get street work done faster and more efficiently.
“Like most communities in Illinois, this money we get that can be used for streets is not enough, which is why Pontiac, like many other communities, is struggling to fix streets” , said Woolford. “That’s where the idea of a 1% non-home rule sales tax comes in, to be spent on street funding.”
The sales tax will cover the purchase of retail items, such as clothing and gasoline, among others.
What it will NOT cover are groceries, prescription drugs, and licensed vehicles.
“Your groceries that you buy and take home are excluded,” Woolford said. “There is a list of 10 things the state has that are included (in the tax). If you go to the restaurant, the food is included there.
An illustration shown indicated that Pontiac residents would spend approximately $4.75 per month, or $57 per year, for this tax. Obviously, spending habits will change depending on the month and what is available.
The money expected from Pontiac households would be $248,121 in taxes collected. An illustration showed that this tax would have generated $1,724,724 in 2021. This means that $1,476,603 would be generated by non-residents.
“Council felt this was the fairest method because when you talk about street repairs, residents use our streets and non-residents use our streets,” Woolford said.
Dwight already has this tax in place. Bloomington and Normal are home communities and have higher tax rates than Pontiac.
“We heard, ‘if you’re going to raise taxes here in town, then why don’t I just go to Bloomington?'” Woolford said. “You would spend more in Bloomington on taxes there and that city would get the tax than here and they would use that money for whatever they designated. Because here it would be used for our streets.
So where is the money that this tax will actually generate going? Woolford said it is divided into three categories. The main objective is the repair of the streets and 80% of the money will be spent on this.
Ten percent will go to the ambulance service, which the city inherited when Duffy Ambulance ceased operations.
“We were very lucky to be able to use the US stimulus money to help kickstart this operation,” Woolford said.
The remaining 10% will go to repeal the telecommunications tax in the General Fund and replace the loss of electricity aggregation funds and be used for community development, Woolford said. The telecommunications tax is a surcharge on telephone and cell phone bills, which helps fund the 9-1-1 centre.
Earlier this year, the city council said if the sales tax passed, it would post a $7 million bond to cover repair costs in advance and reimburse creditors using the sales tax. Woolford said once the debt is created, the city is locked in and minds cannot be changed.
This is the third attempt in three years for this measure, but it is the first time that other factors have come into play. The city hopes residents understand that it’s not a big cost to them, but rather to those who come to town for whatever reason and shop.