Understanding Macomb's the Sales Tax Option

LOCAL OPTION SALES TAX- *this document was prepared as an informational document by the City of Macomb and is placed here for voters to learn about the issue prior to voting their conscience. Since preparation of this document, the Sales tax was passed by voters and the money brought in has yielded many successful infrastructure improvements thoroughout our community. It has been a HUGH success!

Project HANDS supported the sales tax option as a means of taking the burden for our infrastructure off of the backs of property owners and dividing up the costs for all of those who use the facilities.

QUESTIONS AND ANSWERS

1. What is the 1/2 of 1 percent local option sales tax?

A. If approved by the voters, the City of Macomb will impose a 1/2 of 1 percent sales tax on both goods sold by retailers and parts sold by servicemen within the corporate boundaries of the City. The local option sales tax will be paid at the point of sale by both residents and non-residents. The local option sales tax will be in addition to the current sales tax of 6.75 percent. Recipients of funds generated by the current 6.75 percent sales tax are as follows:

• State of Illinois -- 5 percent
• City of Macomb --1 percent
• McDonough County -- 3/4 percent

2. Who will pay the 1/2 of 1 percent local option sales tax?

A. The 1/2 of 1 percent local option sales tax will be paid by any resident or nonresident who purchases nonexempt goods sold by retailers and parts sold by servicemen in the City of Macomb. Any person, whether that person is a year-around resident, a part-time or student resident or a nonresident shopping in Macomb, will pay the local option sales tax.

3. How much money will the 1/2 of 1 percent local option sales tax produce for the City of Macomb?

A. The 1/2 of 1 percent local option sales tax on goods sold by retailers and parts sold by servicemen is projected to generate $725,000 per year.

4. Are food, drugs and automobiles exempted from the 1/2 of 1 percent local option sales tax?

A. Yes, food purchased in grocery stores, drugs and automobiles are exempted from the 1/2 of 1 percent local option sales tax. The sales tax rate currently collected on these items will remain in effect. Food sold for immediate consumption at a dine-in or carry-out restaurant is subject to the 1/2 of 1 percent local option sales tax.

5. How can the City of Macomb use the additional revenue generated by the 1/2 of 1 percent local option sales tax?

A. The additional revenue may only be used for public infrastructure projects. Public infrastructure is specifically defined as municipal roads, streets, access roads, bridges, sidewalks, waste disposal systems, water and sewer line extensions, water distribution and purification facilities, storm water drainage and retention facilities and sewage treatment systems.

6. Must the 1/2 of 1 percent local option sales tax be tied to specific public infrastructure improvements in order to be placed on the ballot for voter consideration?

A. No, state law does not require the City of Macomb to specify what the funds will be used for prior to the referendum being placed on the ballot. However, the City must spend the revenue from the local option sales tax on allowable public infrastructure projects as defined in Question # 5.

7. Why is it necessary for the City of Macomb to generate additional funds for public infrastructure projects?

A. The City has experienced reduced revenues in its general fund over the past several years because of lower census numbers and the overall downturn in the state and national economy. The City relies heavily on income tax, sales tax and motor fuel tax reimbursements from the State of Illinois to fund street, storm sewer and sidewalk improvements. Reimbursements from the State for these tax sources have decreased over the past several years. Historically, the City was able to spend approximately $300,000 to $400,000 per year on public infrastructure improvements. Due to reduced State reimbursements, the City was unable to budget funds during the current fiscal year for any substantial infrastructure improvements. This trend is expected to continue for at least the next several years.

8. Is farm equipment exempted from the 1/2 of 1 percent local option sales tax?

A. Farm equipment used in the production of agricultural crops is exempt from sales tax. Such equipment would include tractors, combines, plows, etc. Other equipment sold by farm implement dealerships not used in the production of agricultural crops, such as garden tractors and mowers, may be subject to the local option sales tax if they are not titled or registered with the State of Illinois. Titled or registered vehicles or other items are not subject to the local option sales tax.

9. How is the local option sales tax different from property tax?

A. Property tax is paid by property owners based on the assessed valuation of real estate (residential, commercial and industrial buildings and land) that they own. Property tax is paid in two installments to the McDonough County Treasurer’s office during the months of June through September. Property tax receipts are distributed to the various taxing bodies based on their property tax levies.

Taxing bodies receiving property tax include Macomb School District 185 (61.8 percent of a typical property tax bill), McDonough County government (11.7 percent of a typical property tax bill), City of Macomb government (9.4 percent of a typical property tax bill) and Macomb Park District (7.3 percent of a typical property tax bill). The remaining taxing bodies, including the Public Building Commission, Library District, Spoon River College, Township and Airport Authority, receive the remaining 9.8 percent of a typical property tax bill.

10. If approved, how long will the 1/2 of 1 percent local option sales tax be in effect?

A. The City Council has placed a “sunset” provision on the 1/2 of 1 percent local option sales tax. The tax will be in effect for five years, after which time the voters will have the option to approve by referendum the extension of the tax. If the voters do not approve such an extension, the tax will expire.

11. Can the City of Macomb repeal the 1/2 of 1 percent local option sales tax before the end of the five year “sunset” period?

A. Yes, the 1/2 of 1 percent local option sales tax may be repealed at any time by approval of the City Council.

12. What is the beginning date for the collection of the 1/2 of 1 percent local option sales tax if the referendum is approved by the voters on November 5, 2002?

A. Collection of the 1/2 of 1 percent local option sales tax will begin July 1, 2003.

13. Is the purchase of alcoholic beverages, either packaged or as a single drink, subject to the 1/2 of 1 percent local option sales tax?

A. Yes, only food purchased in grocery stores, drugs and titled or licensed vehicles are exempted from the 1/2 of 1 percent local option sales tax.

SALES TAX RATES FOR SELECTED WESTERN ILLINOIS COMMUNITIES JULY 1, 2002

MACOMB		6.75%
GALESBURG		7.25%
MONMOUTH		7.25%
MOLINE		7.00%
PEORIA		8.00%
QUINCY		7.75%
SPRINGFIELD		7.25%
CANTON		6.25%
CARTHAGE		6.25%
JACKSONVILLE		6.25%