Frequently Asked Questions
____________________________________________________________________
How did this 1% Sales Tax Opportunity come about?
The idea originated in Iowa in 1998. Since that time EVERY county in Iowa has adopted it.
This proved to be a challenge for the schools in Illinois counties that border Iowa. Families were being drawn to the new and updated facilities that Iowa schools could offer.
Legislation was passed by the Illinois General Assembly on May 30, 2007 to give Illinois counties the opportunity to pass a 1% Sales Tax Increase. Local Representative Chapin Rose and Senator Dale Righter voted in favor of this legislation.
______________________________________________________________________________________________________________________________
What’s the official name of the tax?
While it is commonly referred to as the 1% Sales Tax, the official name is the Illinois County Facility Tax Act (Public Act 95-0675).
______________________________________________________________________________________________________________________________
Have any local counties passed it?
Yes. Champaign County in April 2009. The 14 Champaign County school districts have begun receiving sales tax dollars this year. Those Champaign County residents from districts that pledged abatements will enjoy property tax relief beginning with property taxes payable in 2010.
__________________________________________________________________________________________________
Timeline?
School Districts Passed Resolution Charleston CUSD #1 - August 19, 2009
Mattoon CUSD #2 - August 11, 2009
Oakland CUSD #5 - August 19, 2009
County Board Certify Resolution no later than December 3, 2009
Election February 2, 2010
Ordinance Adopted by County no later than April 1, 2010
Sales Tax Goes into Effect July 1, 2010
Funds Received by Regional Office of Education 90 days after July 1, 2010
School District Receives New Sales Tax Revenue October 2010
When I go to vote, how will the ballot read?
Shall Coles County be authorized to impose a retailers’ occupation tax and a service occupation tax (commonly referred to as a “sales tax”) at a rate of one percent to be used exclusively for school facility purposes?______________________________________________________________________________________________________________________________
How is the Sales Tax placed on the ballot?
Two ways:
County Board may pass a resolution or
School District may pass a resolution
When School Boards representing at least 51% of the resident student enrollment of Coles County adopt resolutions, the County Board must certify the question to the County Clerk.
The County Clerk will place it on the ballot at the next regularly scheduled election.
______________________________________________________________________________________________________________________________
What does it take for the Sales Tax to pass?
A simple majority (51%) of county wide voters.
______________________________________________________________________________________________________________________________
What are the present Sales Tax rates:
City/Municipality Rate
Charleston 6.75%
Mattoon 6.75% (7.75% in South Rt. 45 Business District)
Oakland 6.25%
Champaign 8.75%
Urbana 8.75%
Effingham 6.50% (7.50% in Ford Ave. Business District)
Decatur 8.00%
Terre Haute 7.00%
Coles County 6.25% (outside city of Charleston)
Champaign County 7.50% (outside cities of Champaign-Urbana)
Effingham County 6.50% (outside city of Effingham)
How much property tax relief would the average homeowner receive?
The owner of a $100,000 home living in the following school district would approximately save:
Charleston $173
Mattoon $173
Oakland $136
______________________________________________________________________________________________________________________________
How much revenue will each district receive?
Charleston approximately $1.9 million
Mattoon approximately $2.3 million
Oakland approximately $148,000
______________________________________________________________________________________________________________________________
What is taxed?
Everything in the municipal and county sales tax base is included EXCEPT the following items:
Most Groceries
Drugs
Farm equipment and parts
Farm Inputs
Cars, Trucks, and ATV’s
Boats and RV’s
Mobile Homes
In a sentence “If it’s not currently taxed, it will not be taxed.”
______________________________________________________________________________________________________________________________
What is the benefit to the citizens of Coles County?
If this referendum passes it will ease the burden of property taxes. Students will have the opportunity to attend more modern energy efficient school buildings. The three school districts will have additional funding with which they can maintain their buildings.
Better schools and lower property taxes draw new business.
As our school systems become stronger our property values will grow.
______________________________________________________________________________________________________________________________
How much money will a 1% sales tax increase generate?
Based on past revenue collected, a 1% sales tax could generate around $4.45 million annually.
By district it would mean an additional:
$1.9 million dollars for Charleston School District
$2.3 million dollars for Mattoon School District
$148,000 dollars for Oakland School District
______________________________________________________________________________________________________________________________
How can the money be spent by the school districts?
It will pay facility related debt thereby reducing property taxes. Acquisition, development, construction, reconstruction, improvements, financing, architectural planning, installation of capital facilities, fire prevention, safety, energy conservation, disable accessibility, school security and specified repair purposes under Section 12-2:11 of the School Code.
______________________________________________________________________________________________________________________________
Can you give us an example of what the cost would be if we went shopping?
A consumer who spends $50 at Wal-mart on non-food items would pay an extra 50 cents in sales tax.
An owner of a $100,000 home would have to spend over $17,000 on non-exempt items to lose the benefit of the tax swap.
______________________________________________________________________________________________________________________________
How is the money distributed?
Once collected by the Illinois Department of Revenue, it will be distributed in equal portions based on student enrollment to the three districts in Coles County.
The proceeds collected will first be sent to the Regional Office of Education (ROE #11). The ROE then distributes the funds to the school districts based on their percent of resident students in the county attending the district as reported on the Fall Housing Report.
Simply put, each resident student in the county receives a dollar figure as their piece of the sales tax pie. A district then receives that student’s funds.
______________________________________________________________________________________________________________________________
How can the school districts use the money?
Sales tax money may only be used for facility related issues.
Eligible Projects
Reduce Property Taxes
Pay Facility Realted Debt
New Facilities and Land Acquisition
Demolition
Additions, Renovations, and Parking Lots
System Upgrades
Ongoing Maintenance
Architectural Planning
Durable Equipment (non-movable items)
Disable Access
Security
Financing Costs
Reducing (abating) Property Taxes Levied to Pay Bonds Issued for School Facility Debt
Ineligible Uses
Salaries and Overhead
Buses
Operating Costs
Detached Furniture and Fixtures
Computers
Moveable Equipment
______________________________________________________________________________________________________________________________
Who benefits from an increased Sales Tax?
First, the property taxpayers of Coles County. The will get much needed relief from property taxes.
Secondly, the students of Coles County. The tax will allow for improved facilities and on-going maintenance which will support quality learning environments for kids.
Third, the business owners of Coles County. Better schools and lower property taxes attract families and economic development.
______________________________________________________________________________________________________________________________
Will the 1% Sales ever sunset and what happens when current bonds retire?
Three Options:
1. Sales Tax Remains for Maintenance and/or Expansion
The County Board imposes the sales tax. They may leave the tax in effect after bonds are retired. In this option, the school district could use the revenue for ongoing maintenance and expand facilities if needed without increases in property taxes for facilities.
2. Sales Tax Repealed
The County Board may repeal all or part of the sales tax in .25% increments from 0 - 1% at any time; however, they must continue to impose a rate sufficient to pay for bonds supported by the sales tax.
3. Property Tax Levy Decreased
The School Board could decrease property taxes levied for the Operations and Maintenance Fund and subsitute sales tax revenue to pay for some maintenance costs should the tax remain in effect.
What happens to the Sales Tax money?
Just like all sales taxes, the proceeds are collected by the Illinois Department of Revenue. After the state collects the tax, the proceeds will be returned to the Regional Office of Education. The Regional Office then distributes the funds to the school districts based on their percent of resident students in the county.
Again, as with all sales taxes, the Illinois Department of Revenue charges a 2% fee.
Must a school board annually decide how to use this proposed new sales tax money?
Yes.
The Illinois School Code requires school boards to annually develop a school budget based upon all expenses and revenues. The school boards of all three districts have signed a Resolution pledging to reduce property taxes should the sales tax be approved.
Some will mock this non-binding resolution; however, others will recognize that school board members are elected to non-paid positions and are accountable to our community, our students, and our schools.
How does the annual abatement process work?
In order to abate, or otherwise reduce the property taxes related to school facility debt, each year the school board must direct the county clerk NOT to collect property taxes for the dollar amount of the bond payment.
If this is not done, by law, the county clerk will levy the property tax for the bond payment. The process of abatement is transparent as the school boards will present the levey and the resolution to abate in November and act in December of each year.
What is the history of the sales tax in Coles County?
Since 2002, the average sales tax receipts have grown by approximately 2.67%.
What are alternate revenue bonds and debt certificates?
Alternate revenue bonds are general obligation bonds which provide an alternate revenue source (county-wide sales tax) replacing the property tax as the primary source of repayment for bonds.
Alternate revenue bonds are secured by sales tax revenue. Bonds can only be sold up to 75% of projected annual sales tax revenue, so there is a 25% cushion. Projected sales tax revenues are required by law to be calculated in a feasibility study conducted by an independent consultant. The bonds are payable from sales tax revenue; however, if sales tax revenue fall short, property taxes may be used to cover the shortfall.
Debt cerificates are secured only by the operating revenues specifically pledged to the bonds (i.e. sales tax) and additional property taxes cannot be collected to make bond payments.
How much property tax relief would a farmer receive?
Based upon a 52 cent reduction in Charleston and Mattoon, and recognizing that farmland is assessed based upon yield, soil types, etc., farmers could expect the following savings:
Tax Relief Acres Assessed Valuation
$910 250 $175,000
$1,820 500 $350,000
$3,640 1,000 $700,000
