Wednesday, December 01, 2010
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LCHS board agrees to seek sales tax increase with property tax reduction

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[December 01, 2010]  The Lincoln Community High School Board of Education met in a special meeting Tuesday evening for the purpose of voting on two agenda items. With six of the seven board members present, both motions passed with unanimous votes.

Those present were Rick Hobler, board president; Jim Mammen, vice president; Reatha Owen, secretary; Marianne Krusz; Darrel Vermeire; and David Welch.

The first item on the agenda was a resolution to place a referendum question on the April 2011 ballot, asking voters to approve a 1 percent retailer's occupation and service occupation tax in the county, with the proceeds to be used exclusively for school facility purposes.

The second item was a resolution promising that if the tax commonly referred to as a sales tax is approved, the LCHS portion of the annual property tax assessment will be reduced by 6 percent.

In a conversation with Robert Bagby, high school superintendent, prior to the meeting, he outlined the benefits of changing the school's revenue source and how the money could and could not be used.

The County Schools Facility Occupation Tax Law was passed and put into effect by the state of Illinois in October of 2007.

This law enabled school districts to levy a sales tax on certain consumer products and services, with specific uses for the money outlined by the law. Since that time, a number of Illinois counties have implemented the tax, including most recently Macon County.

As voters prepare to consider this issue in April, Bagby said they should be aware that this is not an across-the-board increase in sales tax. There are several products and services that will not see this tax increase, including grocery products, medication, medical supplies and services that are currently tax-exempt.

Also on the exempt list would be farm equipment and any vehicle requiring a title for ownership, such as cars, trucks, motorcycles, and even boats or airplanes.

Products that will be taxed include gasoline, alcohol products, tobacco and general merchandise. The service industries that will be taxed will include restaurants and motels.

For Lincoln and Logan County, with Interstate 55 passing on the west side of the city, Bagby noted that there are thousands of people who get off the interstate at Lincoln and purchase gas, eat a meal at a restaurant and even stay over in one of our motels.

It is expected that with local residents and out-of-town visitors all paying the tax, the revenue generated would amount to approximately $1.2 million annually.

When the tax law was passed in 2007, it was done with restrictions on the use of the funds.

Under the new law, money generated through the sales tax can be used only for school facility purposes such as acquisition or construction of new facilities, rehabilitation or improvement of current facilities, purchases of long-term durable equipment, and updating of fire prevention, safety, energy conservation and disability access programs in the schools.

The money cannot be used for increasing wages or benefits to employees, hiring new employees, or in paying the general daily operations costs of the schools.

The money can also be used to pay off existing bonds and can be cash-pooled for future uses, which should eliminate the issuing of new bonds in the future.

For the property owner this is an important issue. Bonds, simply put, are loans where repayment is guaranteed through property tax levies. Bagby said the last bond issue for the high school was done in 2007 so that life/safety improvements could be made at the facility. He noted that the sales tax will assist in paying off that bond, but in addition, the school will have an established facility fund for the future.

Every 10 years, the school goes through a life/safety inspection as mandated by the Illinois State Board of Education. As a result of these inspections, the state board will issue mandates for improvements that must be made to facilities for the safety and well-being of the students.

With a facility fund in place, the school will have immediate cash to draw on for these improvements, and Logan County property owners will be less likely to have to bear the burden of additional tax levies.

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The second resolution passed by the LCHS board Tuesday night was a promise that if voters approve the sales tax referendum and the Logan County Board implements it, the high school will lower its share of the Logan County property tax levy by 6 percent.

Bagby noted that for a property that is currently assessed at $125,000, this will result in a reduction of property taxes by approximately $90 per year.

Currently the tax rate for the high school is $2.30992, the second-lowest in the area, with only West Lincoln-Broadwell being less at $2.14775. Bagby said the 6 percent decrease would make the LCHS levy the lowest in the county.

If the referendum passes in April, the decision on imposing the tax will then go to the Logan County Board.

This was mentioned during the board meeting, with David Welch asking what would happen with the resolution if the county decides not to go for the full 1 percent tax increase. He noted that even if voters approve the 1 percent, the county board may elect a smaller amount: for example, 0.5 percent.

The discussions that ensued maintained that the resolution for the 6 percent would be adjusted accordingly, but there will still be a promised reduction in property taxes.

According to state law, in order for the tax to be passed, school districts representing at least 51 percent of the student population must approve a resolution similar to the sales tax resolution passed by LCHS.

The districts, however, are not required to pass any resolutions regarding property tax abatement. Bagby said that doing the property tax abatement for LCHS was a voluntary move on the part of the board, and he personally supported it because in the long run, it would help Logan County property owners.

,On Tuesday two other school districts were to vote on the 1 percent tax.

District 27, which represents the city elementary schools and Lincoln Junior High School, passed its resolution Tuesday afternoon. Bagby said that with District 27 plus the high school, the 51 percent needed has been achieved.

Also voting on a similar motion Tuesday night was the Chester-East Lincoln school district.

Bagby said that other districts such as Mount Pulaski will be following suit in the near future.

The idea of asking for a 1 percent sales tax comes from work that has been done by a school cooperation committee. This committee came to be as a result of a consolidation study conducted in 2007. The committee's purpose is to explore means of making the Logan County school systems more productive and efficient while improving the quality of education for Logan County students.

The group conducted the research on the sales tax and recommended it to all the district school boards.

If the sales tax is implemented in Logan County, it will not take effect until the year 2012. Once funds start coming in, the money will go to the Regional Office of Education, where Jean Anderson, regional superintendent of schools, will then disburse it to the individual districts, based on their student population.


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