Monday, September 20, 2004 11:43 AM CDT
City officials say revenues from sales tax increase adding up
By ROB STROUD AND HERB MEEKER, Staff Writers
The extra half-cent of sales tax that went into effect in January in Mattoon and Charleston is bringing in slightly more revenue than what officials in either citiy had predicted.
Mattoon is on pace to receive an extra $40,000 more than estimates while Charleston could reap an additional $100,000 if current consumer spending remains steady.
Mattoon expected to generate $1.2 million during the first year from the half-cent increase. Through the first six months of the year, consumer spending in Mattoon was on pace to generate $1,240,680. Charleston officials predicted the extra half-cent per $1 would yield about $450,000. But Mayor Dan Cougill said if receipts remain steady, the city could receive about $538,000.
The city sales tax hikes were approved by a majority of Mattoon and Charleston voters through April 2003 referendums. The sales tax rates in Mattoon and Charleston increased half a cent, from 6.25 to 6.75 percent.
The increases added about 13 cents for a $25 meal or 50 cents for a $100 purchase of merchandise. Groceries, drugs and medical supplies, cars and other titled vehicles are exempt from the sales tax hikes.
"We have received six payments and the monthly average is $103,390," said Mattoon Treasurer and City Attorney Preston Owen. "And it shows the sales at local retailers are picking up. I think (City Administrator Rich Underkofler's) figure was a conservative estimate, based on the last two years of sales."
The city already committed funds to reducing the property tax levy, which would have consumed about half of the projected increase in tax receipts. The remaining money will be earmarked for infrastructure work, mainly efforts to reduce flooding in certain parts of Mattoon.
The Illinois Department of Revenue distributes communities' share of sales taxes collected through local retailers.
The total number of all sales tax receipts for the first six months of 2004 for Mattoon is $2,875,122. The sales tax increase is $620,344 of that total. Last year, sales tax funds for the city amounted to $3,706,763.
The best month so far for sales tax receipts is June with sales tax receipts totaling $342,279. During 2003, sales tax was $284,778 for June.
"Those figures tell me people are spending more in Mattoon than last year," Owen said.
These sales taxes are collected through 493 businesses in Mattoon.
The categories of sales show how consumers in Mattoon spent their money during the first three months of 2004. General merchandise accounted for $194,293 of Mattoon sales tax receipts during the first quarter.
Agriculture and remaining categories accounted for $116,052 of tax hike receipts, and drinking and eating places produced $69,651 of sales tax figures during the first three months in Mattoon.
Charleston officials say they have figures only for January through May.
The city of Charleston received more than $40,000 in additional revenue in each of these five months since its share of state sales tax revenue increased by half a cent at the beginning of the year.
Charleston Mayor Dan Cougill said if such figures remain steady, the city projects it might receive $538,018 in sales tax revenue for the year above the old 6.25 percent.
"It kind of depends on how the economy looks for the rest of the year," Cougill said.
Charleston also pledged to divide revenues from the increase equally between infrastructure improvements and property tax relief.
"We will hold true to our promise. That is the way the money will be spent," said Charleston City Manager Scott Smith.
In regard to property tax relief, Smith said the city chose to apply the increased revenue to the fiscal year 2005-06 property tax levy instead of the current 2004-05 levy. He said the city will have a better idea of how much revenue is available for property tax relief by tracking sales tax figures throughout 2004.
The Charleston City Council is scheduled to vote in December on the 2005-06 levy, a request for property tax funds. Cougill added the city has tried during the last several years to hold the line on its share of residents' property tax bills.
Cougill and Smith said the city has not earmarked the increased revenue yet for any particular infrastructure improvements. This will occur as the council and city staff sit down at their Nov. 18-19 planning retreat, go through the tax levy process, and prepare to adopt the 2005-06 city budget in May.
The cities' share of sales tax will increase from 1 percent to 1.5 percent. Groceries, drugs and medical supplies, cars and other titled vehicles are exempt from the sales tax hikes.
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MARYROSECOHOON1998@ATT.NET wrote on Sep 28, 2007 10:03 PM: