Urbana may vote on sales tax increase

Urbana may vote on sales tax increase

URBANA — City council members have another chance to vote on a one-quarter cent sales tax increase when they meet this week.

Monday's city council meeting at 7 p.m. in the Urbana City Building, 400 S. Vine St., is the last regularly-scheduled opportunity council members have to approve the sales tax increase if they want it to be effective as of Jan. 1, although they could call a special meeting before the Oct. 1 approval deadline.

The vote was deferred two weeks ago when Alderman Michael P. Madigan, R-Ward 6, asked for more time to review the budget for alternatives to close a $1 million shortfall. Under city council rules, Madigan is not allowed to ask for another deferral this week.

Mayor Laurel Prussing has proposed the increase as a way to shore up that budget gap. The increase would move the city's portion of the sales tax to 1.5 percent and the overall tax to 9 percent — that's the same as Champaign after it passed an identical increase this summer, among the highest in central Illinois and one-quarter percentage point below Chicago's sales tax.

Prussing said two weeks ago that she thinks she has the votes she needs to approve the one-quarter percentage point sales tax increase.

Prussing expects the sales tax increase would bring in an extra $686,000 annually, new revenue she says it needs to cover losses from a Carle Foundation Hospital property tax exemption and rising costs of employee health insurance — which Prussing also blames on Carle.

Because the increase would be effective halfway through the fiscal year, city officials expect to collect only $343,000 in this budget cycle. That leaves a remaining budget gap of about $640,000.

Prussing has proposed spending cuts to close the remaining gap, including revisions to city employees' health insurance benefit.

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