Hesitant Urbana council moves forward on sales tax increase

URBANA – Mayor Laurel Prussing’s quarter-cent sales tax proposal made it through to the next step in the legislative process on Monday night despite the hesitancy of a few city council members.

The city council will take up the one-quarter percentage point increase at its next meeting in September, when city council members expect Prussing to bring some more details on her plan to close a $1 million budget gap, most of which she attributes to a Carle Foundation Hospital property tax exemption.

Prussing said a sales tax increase is “a more fair way of trying to bridge the gap” instead of raising property taxes.

The quarter-point sales tax increase would move the city's portion of the tax to 1.5 percent. Including the state and other county rates, the overall sales tax in Urbana would total 9 percent, up from 8.75.

That matches an identical sales tax increase the Champaign City Council approved earlier this year. If the Urbana City Council gives the green light, too, both taxes would be effective Jan. 1.

“I don’t think it’s going to hurt the Urbana businesses since Champaign already has the increase,” Prussing said.

The Urbana City Council is working under a deadline – it must notify the Illinois Department of Revenue of the increase by Oct. 1. Monday night’s discussion was the first of the Prussing proposal.

Some city council members said they wanted a few more weeks to consider the increase – they only received Prussing’s memo on the tax late last week.

City council members acting as the committee of the whole supported the tax increase in an 8-1 vote – mostly to keep the process moving. Before they give formal approval, they want to see what else are in Prussing’s plans to close the $1 million budget gap.

Prussing said the sales tax increase is part of the plan and not the full solution, but she would not elaborate Monday night on what else might be coming.

“I don’t want to talk about them right now, but we are working on other things because we have to bridge the entire gap,” she said.

Alderman Michael P. Madigan, R-Ward 6, was the only “no” vote on Monday night and said he thinks it is “an absolute mistake to not consider a reduction of head count” to save money.

“We must look for savings where we can get them, and personnel services is a huge, huge part of this budget,” Madigan said.

Prussing has in recent years touted the lack of city layoffs through the recession. Alderman Dennis Roberts, D-Ward 5, echoed her words on Monday.

“If our choices are going to be between contemplating layoffs or the sales tax, I think most people are going to prefer the sales tax,” Roberts said.

Only one representative of local business made public comment at Monday night’s meeting. Brittany Bailey Frost of Blossom Basket Florist said the increase could be harmful.

“We feel like it might be detrimental to local businesses,” Frost said. “We already have a pretty high local sales tax, higher than 94 percent of the state.”

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