Schools tax would put Danville's rate on par with Chicago's

Schools tax would put Danville's rate on par with Chicago's

Hear more from Eisenhauer Thursday at 7:40 on WDWS.

DANVILLE — Small-town Danville and big city Chicago don't have much in common, but the two could soon share the state's No. 1 ranking for highest sales tax rate if Vermilion County voters approve increasing their rate by 1 percent next year.

It's a distinction Scott Eisenhauer does not fancy. Danville's mayor said he has told Vermilion County school superintendents "on more than one occasion" that he doesn't support a schools facility tax that would increase the sales tax by 1 percentage point throughout the county — including in Danville, where the rate is already a tops-in-the-area 9.25 percent.

At 10.25 percent, Danville, the state's 60th-most populous city, would match the rate in Chicago, the country's third-largest city.

"While I completely understand they're seeking additional revenue and I don't begrudge them at all for trying to make facility improvements that they deem necessary, for us to go any higher on sales tax would not only drive those who are shopping here now to go somewhere else but would also drive those retailers who are considering us for future locations to look elsewhere," Eisenhauer said Tuesday.

If the hike is put before voters in March — and approved — the resulting revenue would be distributed to Vermilion County public school districts based on enrollment and used for facility improvements and debt payments.

For Danville, it would mark the second rate increase this decade.

Two years ago, the city — facing its own struggles to generate revenue and meet rising costs — increased its local sales tax rate by half of a percentage point, to the current 9.25 percent. The money generated goes toward community reinvestment within the city.

Eisenhauer said city leaders were cognizant of where that put Danville's rate relative to those of other towns. Most notably, it was now higher than Champaign and Urbana (both 9.0), where residents could easily choose to spend their retail dollars.

"I've never considered wanting to go higher," Eisenhauer said.

'Could be problematic'

Neil Stern, a senior partner with Chicago-based retail consulting firm McMillanDoolittle, conducts research on how consumers view sales tax rates.

While "they may grumble" about a rate hike, it doesn't often affect whether they travel out of town to get takeout, he said. Where it does become a factor, however, is when "you start looking at large ticket purchases."

"A 1 to 2 percent increase, it starts to become meaningful" with jewelry, furniture and the like, he said.

Worse yet, Stern said, a higher sales tax rate could lead retailers to choose to open businesses elsewhere.

"That could be problematic for a town like Danville. You don't want to put any impediments in the way," said Stern, who added that retailers in neighboring cities could also tout their lower rates when trying to attract business.

"I may advertise to people in Danville: 'Come our way and save money on taxes.' It's unfortunate, but it can happen."

Shop local? Maybe not

Andrew Daily, the store manager at Slumberland in Danville's Village Mall, fears what a rate hike could mean for his business.

"It could be more of an incentive to go elsewhere other than Danville," Daily said. "Getting funding for our schools is a priority, but you very well could have a negative impact on generating new business locally and keeping people shopping in the local community."

Of Slumberland's 126 stores throughout the Midwest, Daily said, only a few are located in cities with sales tax rates over 10 percent.

While purchases like vehicles and mobile homes would be exempt from the 1-cent increase, furniture is not.

"So a 10.25 percent rate on $1,000 of merchandise, you are already at $100, so that could definitely have an impact on my business and on the overall spending power for local consumers," Daily said. "Your dollar doesn't go as far when you have to pay that sales tax. You might not be able to get everything you wanted."

Besides mobile homes and vehicles, the other items exempt from a county schools facility sales tax include groceries, medicine, farm equipment, seed, fertilizer, all-terrain vehicles and recreational vehicles.

Here's where your rate ranks

At 9.25 percent, Danville already boasts the highest sales tax rate of the 70 incorporated towns in Champaign, Douglas, Ford, Piatt and Vermilion counties. And if a new proposal makes it to the March 20 ballot and is blessed by voters, the city of 31,597 could find itself tied with Chicago (pop. 2,704,958) for the highest rate in Illinois — 10.25 percent.

Here's a look at every area community's current rate, according to the Illinois Department of Revenue.

9.25 — Danville

9.00 — Champaign, Rantoul, Urbana

8.50 — Ogden, Tilton

8.25 — Atwood (business district), Cerro Gordo (business district), DeLand, Villa Grove

8.00 — St. Joseph, Savoy

7.75 — Arcola, Tuscola

7.50 — Bondville, Broadlands, Champaign County, Fisher, Foosland, Georgetown (business district), Gifford, Homer, Ivesdale, Longview, Ludlow, Mahomet, Oakwood, Pesotum, Philo, Royal, Sadorus, Sidney, Thomasboro, Tolono

7.25 — Arthur, Atwood (non-business district), Bement, Camargo, Cerro Gordo (non-business district), Cisco, Douglas County, Garrett, Hammond, Hindsboro, Mansfield, Monticello, Newman, Piatt County, Rossville

6.50 — Allerton, Alvin, Belgium, Bismarck, Catlin, Fairmount, Fithian, Georgetown (non-business district), Henning, Hoopeston, Indianola, Muncie, Potomac, Rankin, Ridge Farm, Rossville, Sidell, Vermilion County, Westville

6.25 — Cabery, Elliott, Ford County, Gibson City, Kempton, Melvin, Paxton, Piper City, Roberts, Sibley

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Gordon wrote on November 29, 2017 at 10:11 am

"small town Danville and big city Chicago don't have much in common" except the percentage of felons from Chicago in Danville is probably the same as the percentage of felons in Chicago from 
Chicago.