MORRIS – The Board of Education for Morris Community High School will likely not be supporting a proposed sale tax increase that would go toward helping Grundy County schools because the potential for lost public services is too great.
The Morris High School board met Monday, and although it was not voted on as action, the consensus of the board was not to support it.
“I understand there are a variety of viewpoints on this topic, but this decision reflects the situation and needs of District 101,” Superintendent Pat Halloran said Thursday.
Local schools have been considering a proposed sales tax increase that would have to be approved by the taxpayers through a referendum. The schools could use the tax money for new school facility costs or for debt payments on previous facility costs. The money could not be used for salaries, supplies or operations.
School districts receive much of their funding from property taxes, but receive no sales tax. If the facility tax was added, schools could potentially decrease their portion of property tax rates by receiving some sales tax.
But because Morris does not have longterm building debt, this would not offer district residents a relief in property taxes for the sale tax, Halloran said.
The proposed increase can only get on the ballot if school districts’ boards representing at least 50 percent of the county’s population approve a resolution to request the sales tax increase. This must be done by Dec. 30 to get on the March ballot.
The sales tax would be on items such as gas, restaurant orders and nongrocery items. But it would not be on the purchase of vehicles, unprepared food, over-the-counter drugs or farm equipment. One of the pros mentioned about the tax has been that shoppers who are not residents also would pay the tax.
After hearing local municipalities concerns at a public meeting last month, Halloran said his board members felt the risks were not worth the tax increase.
In Morris, Coal City and most of Grundy County, the sales tax rate is 6.25 percent. With the increase, it would go to 7.25 percent.
“Honestly, as a school board president, it’s tough for me to turn away the possibility of over $1 million in revenue for our school district, but we have to look at the overall picture and what it would do countywide,” board president Dennis Best said Thursday.
The bigger picture is the possibility of Grundy County having to cut services for its taxpayers. At last month’s public meeting, John Galloway, chairman of the Grundy County Board’s Finance Committee, said the county would have to make cuts if the tax went through.
“I consider [Morris High School’s decision] positive news for the employees of Grundy County and the citizens of Grundy County,” he said Thursday.
The concern for municipalities like Channahon, as well as Grundy County, is it will receive income from point-of-sale businesses, which is when a business accepts sales only in a location.
In Illinois, there are multiple businesses that operate out of places with high sales taxes, like Cook County, but move where the business’ sales are accepted to counties with lower sales tax rates – which is allowed under Illinois tax code. Channahon is home to such a situation.
In Channahon’s last fiscal year it received more than $1.4 million from point-of-sales income and the county received about $1.8 million, or 43 percent of all its sales tax.
The fear is if the sales tax is raised, these point-of-sale offices will leave for a county with a lower sales tax.
But an Illinois Supreme Court decision released Thursday may result in future changes to point-of-sale regulations and could be a factor local school districts need to consider, said Superintendent Kent Bugg of Coal City Community School District.
“I think it opens up new discussion for the board of education to think about because it changes how the one percent sales tax may impact the rest of Grundy County,” Bugg said. “If point-of-sales might not be there, I think the board of education has to have some discussion about the impact of the school facility tax.”
Channahon Village Administrator Joe Pena said the court decision may impact future point-of-sales offices and tax dollars, but he understood it to mean already established offices followed the current regulations.
He said the village understands local schools’ financial struggles, but feels the solution to the late state funding districts often receive is through the Legislature, not a higher tax.
“We just don’t want to gamble on any revenue we know we are getting in,” he said.