Urbana council raises sales tax

URBANA — City council members on Monday cast their final approval of a quarter-cent sales tax increase, meaning customers in both Champaign and Urbana will have to pay a total 9 percent surcharge on their purchases come Jan. 1.

Officials in Urbana have been deliberating over the increase for the past month or so after the Champaign City Council raised its city's tax this summer. The proposal in Urbana originated as Mayor Laurel Prussing's plan to recover revenue the city will lose from a state-imposed property tax exemption for Carle Foundation Hospital.

Prussing said the city faces a $1 million budget gap, and the sales tax increase is part of her solution. The extra quarter-cent is expected to bring in $686,000 annually; it is expected to generate only half of that in this budget cycle, as the tax will not be effective until the midpoint of the fiscal year.

"It is not the entire answer, but I can't figure out how to fill this hole in any scenario or by any strategy that doesn't include this," said Alderman Eric Jakobsson, D-Ward 2. "We have a great big uncertainty in our budget with respect to health care costs, and we have no idea how that's really going to come out."

The increase will bring the city's share of the sales tax to 1.5 percent, and it will total 9 percent including state and county taxes. That puts both Champaign and Urbana among central Illinois cities with the highest sales tax rates, and just below Chicago's 9.25 percent sales tax.

Plans to cover the remaining budget gap — estimated at roughly $640,000 — remained elusive on Monday night. Prussing is hoping city officials can come up with ways to reign in imminent increases in the cost of health care, especially with the Affordable Care Act going into effect.

Alderman Michael P. Madigan, R-Ward 6, has consistently opposed the increase since its proposal, and he remained unconvinced by the budget plan as he cast the lone dissenting vote on Monday.

"I find it frankly repulsive that people will vote for this not knowing the rest," Madigan said. "There's not even anything on the table to discuss. And that is beyond me. Absolutely beyond me."

Madigan said his Ward 6 constituency has been very opposed to the sales tax increase — especially in concert with other city-imposed charges like the new storm water utility fee.

"I think it is literally another pin prick. It's almost like Chinese water torture, I don't know how to explain it," Madigan said. "It's just one fee on top of another."

The sales tax increase in Urbana has not generated as much public discussion at city council meetings as it did in Champaign. Two people addressed council members on Monday night. Among them was Durl Kruse, who said he wanted a verbal commitment if city officials indeed plan to use the sales tax increase to forego a property tax increase.

"I would like to hear you say very clearly and unequivocally ... that you will not raise the property tax for at least another year," Kruse said.

University of Illinois graduate student Dan Elg said a property tax exemption at Carle should not be blamed for the million-dollar budget gap. Rather, he said, the city's spending is far outpacing its natural revenue growth.

"Urbana's problem is not a revenue problem," Elg said. "It's a spending problem."

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Boss Hog wrote on September 17, 2013 at 7:09 am

The cities of Champaign and Urbana take one more step to try to run businesses out of town. We have to raise our prices to cover the drainage taxes. Now we have to charge more sales tax. People are driving out of town to buy things or buying them online, and I don't blame them.

Herb Yardley wrote on September 17, 2013 at 11:09 am

I applaud the Mayor and City Council.  As citizens, we receive many services from City government that too often go overlooked.  Winter is coming, do you really want cutbacks in snowplows?  Do you want cutbacks in fire and police protection?  What Carle got away with on their tax-breaks is an awful shame.  They can afford to pay more to the City that supports them in so many ways.

Also, shame on Mr. Madigan for comparing a very small revenue increase to torture.  Such hyperbole is extreme and insulting.  He should choose his words more carefully.

GeneralLeePeeved wrote on September 17, 2013 at 1:09 pm

Herb,

It's not snowplowing or police costs that are the issue.....it's things like $7.5M for the Olympian Drive project, $5.2M for the Boneyard project, having a full-time staff of 24 people for Community Development, spending $2.2M for Economic Development (and then having very little to show for that), having a full-time staff of 23 and another 23 part-timers to handle the Library.  To paraphrase Everett Dirksen..."a milliion here, a million there and pretty soon you're talking about real money".

 

pattsi wrote on September 17, 2013 at 1:09 pm

Can't resist, but hisorian can find no reference that Dirksen actually said that quote, even though many of use it.  :-)

ROB McCOLLEY wrote on September 21, 2013 at 5:09 am
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It may be a spending problem Dan Elg, but it's most definitely a revenue problem. 

cretis16 wrote on September 22, 2013 at 6:09 pm

It's the same old story....politicos refuse to reign in spending, and insist on funding anything and everything, and worry about how to pay later. Witness the income tax increase that was suppose to take the burden off the budget...NOT. The state of Illinois has the second highest unemployment rate, and a ridiculous amount of taxing districts. All of our money is spent on lavish pensions ( check out Volks MTD gold mind). It;s no wonder people and businesses are fleeing the state...but hey, that's not a problem..we'll just tax the daylights out of those still living here.