At the September 15, 2015 City Council meeting, City Council passed the Home Rule Sales Tax (“HRST”), 0.5% of sales for “the purpose of funding capital projects, reducing debt obligations, and replenishing cash reserves with a sunset provision terminating the home rule sales tax as of January 1, 2018 unless extended by the City Council by October 1, 2017.” So the tax was clearly intended to be temporary in nature, to last two years, with the sole purpose of strengthening the City’s financial position through reducing debt and increasing cash reserves .
At a City Council Workshop on August 28th, 2017 regarding the HRST Mike Wik, Chairman of the City’s Financial Advisory Board, reviewed the options on the HRST:
• keep the tax rate at 0.5% of sales
• raise the rate by 50% (to 0.75%)
• double the rate (to 1.0%)
Never presented was the option of letting the ‘temporary tax’ with the “sunset provision” actually sunset. Mr. Wik’s recommendation was to raise the rate to 1.0%, and cancel the City’s real estate tax abatement of $2.0 million.
The topic of cost reductions was raised, but the HRST has to be extended by October 1st with the State of Illinois, so the position of City staff is that time doesn’t allow for looking for cost reductions yet. Their approach: raise taxes now, look at possible expense reductions later.
Cart before the horse indeed.
You're not out too far on that limb, Councilman.
Of course, City staff knew deadline for approval of the 'temporary tax' with the State was October 1st. Is there a reason why the proposed 2018 departmental expense budgets couldn’t have been summarized sooner and presented in conjunction with the proposed increases? That happens in the private sector, where deadlines get accelerated due to extenuating circumstances. Does the City not have the information available? If not, why? Does the City not want the information to be available?
So in the last two years under Mayor Chirico we’ve seen increased garbage fees, electric rates, water rates and the ‘temporary’ HRST which was scheduled to ‘sunset’ January 1, 2018. We’ve also seen budget maneuvers, like moving some expenses from the operating budget to the capital budget and reallocating a portion of food and beverage tax to current year pension expense instead of the previous reduction of unfunded pension obligations. (We will point out, as will City Council members, that the city portion of the real estate tax levy has been held constant. They’ve decided to raise other taxes instead, and pat themselves on the back for not raising real estate taxes).
The HRST is apparently not only not going to ‘sunset,’ it seems it’s being made permanent, and set to increase 50% or even possibly double.
A thought: If they are serious about expense reductions, then take a cold, hard look at expenses. Defer increasing taxes until thats done. Then justify a tax increase, if any. Apply by April 1, 2018 for the HRST, if it is needed, and make it effective July 1st.
We’ve all heard of Murphy’s Law and its corollaries. Similarly, there is Parkinson’s Law which is "work expands to fill the time available for its completion." Some of Parkinson’s corollaries include “a sufficiently large bureaucracy will generate enough internal work to keep itself 'busy' and so justify its continued existence without commensurate output” and “expenses will rise to meet income.”
The HRST was going to “sunset” in 2018.
The City Council is going to reign in spending after raising taxes to cover that spending.
Mr. Parkinson was a perceptive man.