Champaign council to consider sources of income
CHAMPAIGN — City council members next week will decide which tax or taxes to raise to pay for the extra police, fire and library services they supported this month.
They will need to find more than $1.7 million in new revenue to pay for more police officers, to keep the library on its current schedule and to fund the firefighter overtime necessary to avoid losing an engine on the city's west side.
Knowing that they would need to find extra money to do so, city council members earlier this month said they want those three services intact as Champaign heads into a new budget year beginning July 1.
A one-quarter percentage point sales tax increase could take care of that, and then some. Finance Director Richard Schnuer said administrators will present a mix of options for city council members when they meet at 7 p.m. Tuesday in the Champaign City Building, 102 N. Neil St.
It will be up to city council members to decide which of those options would be most appropriate.
"There's a lot of things we could do and still be in the range of comparable cities," Schnuer said.
Raising the city-only sales tax from 1.25 percent to 1.5 percent could generate $2.8 million in new revenue. That would put Champaign's share of the tax roughly on par with most comparable central Illinois cities.
But the city's total sales tax — which includes all the sales taxes charged by the state and school district — would be near the top of the list at 9 percent. Only Decatur (9 percent) and a special taxing district in Peoria (9.25 percent) would be as high or higher.
If the city council chooses to go that route, the new sales tax likely would go into effect Jan. 1, per state rules. Because of lag time in how the tax is collected and paid to the city, Champaign would not even start seeing the revenue bump until May 2014.
Another option administrators will illustrate for city council members is a food and beverage tax increase. On top of the sales tax, the city puts a one-half percent surcharge on meals and drinks at restaurants and bars.
That's near the lowest among comparable central Illinois cities, and a one-half percentage point increase could raise $1.2 million in new revenue.
On its own, that kind of increase would leave a 9.75 percent surcharge on drinks and meals, and it would put Champaign near the middle in central Illinois and on par with Danville, Bloomington and Normal.
Urbana (9.25 percent), Rantoul (8.75 percent) and Moline (9 percent) would be lower. Decatur (11 percent) and a special taxing district in Peoria (11.25 percent) are the highest.
City officials also plan to bring back for discussion the package liquor tax as the only new tax they present. A tax on alcohol sold at retail could bring in $175,000 per every 1 percentage point.
Two years ago, Champaign City Council members denied creating a package liquor tax at a 4 percent rate. Since then, the city of Urbana began taxing package liquor at 1 percent, and Schnuer believes Champaign council members may be interested in it at a lower rate than the 4 percent proposal or at least as a talking point during their discussion on Tuesday.
Any tax increase the city council approves likely would not go into effect until September at the earliest, Schnuer said. A package liquor tax might take longer because it would be new, and the sales tax would not be effective until next year.
Earlier this month, city council members decided they wanted to hire six new police officers to bring the department back to its pre-recession staffing level. They also wanted to get more money in the fire overtime budget to ensure they have a minimum of 27 firefighters on duty at any given time — that minimum staffing level, which is already in place, will keep an engine at fire station 4 in service full-time.
The new revenue will also fund a $500,000 infusion into the library budget to avoid a reduction of 31 hours per week at its main and branch libraries at least for the next year. Library officials plan to come back to the city council within the next six months to discuss how to avoid projected budget shortfalls in the future.