 A Missouri corporation is making a pretty penny helping to hike local sales
taxes across Illinois. But in the process, it’s proving how local governments
shirk responsibility to keep their spending in check.
Ten years ago, Illinois passed a law authorizing the Illinois County School
Facility Occupation Tax, or CSFT. This law allows elected school boards
representing a majority of the county’s student population to place a sales tax
hike referendum of up to 1 percent on the ballot.
To pass, it requires a simple majority vote. And all that money has to go toward
school facility projects. Odds are you’ve seen this question at the polls at
some point over the past decade, as around 70 counties across Illinois have
voted on this ballot question since 2007.
Take Jackson County, where 57 percent of voters approved a 1 percent CSFT last
October. That means families in Carbondale will pay an 11.75 percent sales tax
on food and beverage items, and a 9.75 percent sales tax on other goods. Those
rates rival those paid by families in Chicago, which is home to the highest
sales tax in the nation among major cities.
The fact that these new sales taxes pile on to already-excessive tax burdens
across the state is bad enough. (A March report from consumer finance website
WalletHub found Illinoisans shoulder the nation’s highest state and local tax
burden, at more than $8,100 annually for the median household.)
But what well-meaning residents may not know about the CSFT is that a
multibillion-dollar business based in Missouri – Stifel, Nicolaus & Co. – is
often pulling the strings.
A 2014 Illinois Policy Institute investigation found Stifel involvement in 12 of
the 14 CSFT hikes in that year’s fall election cycle, and dozens more over the
seven years prior. The company provided guidance to Jackson County officials
last year.
Stifel’s business model looks like this: employees trek across the state
offering free consultation to school boards that want more money for their
districts. Then they make a pitch to handle the lucrative bond business for the
ensuing projects funded by the sales-tax hike. Nice work if you can get it.
But nickel-and-diming tactics like the CSFT end up masking accountability for
local spending decisions. They also show why a weak property tax freeze from
Springfield won’t force local governments to get their spending under control.
Look at Hillsboro, a small rural community about an hour south of Springfield
and the seat of Montgomery County. Montgomery is one of Stifel’s latest targets.
Last year, Hillsboro voters rejected a referendum to build a new high school at
a cost of more than $60 million. Soon after, Stifel representatives showed up
and persuaded Montgomery County Schools to put the CSFT on the ballot this
spring.
[to top of second column] |
“There’s nothing left here to pay a new tax like this,” said Jeff
Dunn, a Hillsboro small business owner. “Really good jobs that would
support a family have left. All of our industry is gone now.”
Hillsboro already levies a special telecommunications tax. And the
local school district hiked its property tax levy by 55 percent from
2006 to 2015.
“We have high unemployment, high poverty and a high number of
residents on food stamps,” Dunn said. “That tax is a real burden on
many people but it’s not enough for the school?”
Biased advising from Stifel often leads to questionable claims from
local officials regarding the CSFT. One popular myth: If voters
approve the sales tax hike, property taxes will go down.
Don’t count on it. Just ask taxpayers in Champaign.
Stifel, local school districts and the Champaign County Board
promoted claims in 2009 that the sales-tax hike would result in
lower property taxes in 13 Champaign County school districts. The
CSFT passed in all of them. But only one of those school districts
lowered property tax levies over the next five years.
The other 12 districts raised property tax levies by an average of
22 percent as of 2014. And that’s on top of the new sales tax, which
has taken tens of millions of extra dollars from Champaign County
residents.
While school districts can place CSFT referendums on the ballot
every election, wearing down any opposition, voters can never
initiate a referendum to repeal the tax once enacted.
New local revenue across Illinois often serves to only prop up an
unsustainable system, one where collective bargaining agreements
ensure benefits far above what residents working in the private
sector can expect, administrative pay continues to rise, and
prevailing wage requirements inflate the cost of public projects.
Part of the Illinois Senate’s failed “grand bargain” was a two-year
property tax freeze. But such a freeze means nothing without reforms
to local government spending, and comprehensive changes to the
roadblocks that protect residents from other tax and fee hikes like
the CSFT.
Without necessary safeguards, companies like Stifel are all too
happy to take advantage of tax-hungry officials.
Click here to respond to the editor about this article
|
