Last week’s Cook County Board meeting was a 4 ½ hour ping pong match of words with the Finance Committee of board members discussing and later approving a 1 percent sales tax increase. Out of 17 Cook County Board Commissioners, nine approved the increase and soon-to-be-retired Commissioner Elizabeth Gorman voted ‘present’.
Nearly five years ago, it was the same deal that Cook County Board President Todd Stroger had proposed clearly understanding the tremendous budget deficit that had to be closed. A seat that was held by his father, the late John H. Stroger for 12 years, opponents made the 1 percent increase a centerpiece for his exit.
Under the guidance of Board President Toni Preckwinkle her proposed 1 percent sales increase was met with mixed scrutiny with over $6 billion dollars of the county worker’s pension hanging in the balance. Opposing voters of the sales increase had many questions including why pass this sales tax hike before the Illinois General Assembly approved a state budget?
At the current county sales tax of 9.25 percent, Cook County has one of the highest county sales taxes in the U.S. Surrounding counties such as Lake County, 7 percent, Will County, 7 percent, and DuPage County at 7.25 percent will lure Cook County residents close to the county line to do business in other neighboring counties. For other residents that don’t have the easy accessibility to take advantage of the lessor increase—this will surely hit the pocketbook.
The one percent sales increase may not make a dent for residents above a certain income bracket. For example, the purchase of a big ticket item at average cost of $1,500 with the current sales tax of 9.25 percent will be $138.75 and starting January 1, 2016 at 10.25% the sales tax will be $153.75.
Next year, the increase will take effect at places that do commercial business in our county. According to the Cook County Guide to General Business Licensing this includes:
General Merchandise/Department Store
Home Centers/Hardware Stores
Nursery/Garden Centers
Clothing or Shoe Stores
Jewelry Stores
Flower Shops
Art Dealers
Office Supplies/Stationary Stores
Book Stores/Newsstands
Sale of Computers, Cameras or Tv
Pharmacies and Drug Stores
Cosmetics, Perfume, Beauty Supplies Shops
Optical Goods Stores
Compact Discs, Tapes and Records
New/Used Cars, Trucks, Motorcycles
Mechanical Repair and Maintenance
Automotive Parts and Accessory Stores
This sums up pretty much every brick and mortar business that exchange money with consumers. For a person on a fixed income whether it’s our average senior, college student, unemployed or disabled resident hese changes will have long term ramifications.
How does this affect us as consumers?
An average weekly purchase of groceries at Aldi’s or Mariano’s for a family of four could be $160.00: $16.40 ($1.60 increase).
A bigger ticket item from Sears or Home Depot for home improvement and repairs for washer/dryer combo: $999.98 ($92.49, 9.25 percent) and ($102.49, 10.25 percent). This would be a $10 increase.
Consumers making car purchases will feel the hemorrhage as the average purchase cost of a vehicle is $15,500. The sales tax increase will be $155 more next January. Although, most of us will deal with the chokehold of steady increases that our state, city and county are implementing, some residents will gladly travel a few miles beyond the Cook County limits to save money.
Technology purchases would also increase with the new sales tax. A purchase of an Insignia flat screen television at $189.99 ($17.57 9.25 percent) and ($19.47,10.25 percent). A slight increase of $1.90 per item. The sales tax increase on an iPad mini ($299.99 retail) would be $30.74 up from $27.74 per item.
Every day Illinois residents are crossing the state border, traveling to Indiana to fill-up their gas tanks to save 40-50 cents per gallon. The rising costs of living expenses are taking their toll and saving an additional $7-$10 can go a long way. Some of these examples are important to share as we’re constantly told by mainstream media that we are technically out of a recession or unemployment has dropped. However, there is a different reality in urban households today.
As the pension reform includes the investment of workers, their savings and retirement are crucial to the survival of our local economy. They must reside, eat and stimulate the county’s economy and without this, monies that are earned by county workers will result in a much bigger problem at hand. After a year of the sales tax increase, the tax hike will generate nearly $474 million in revenues and proposed that revenues be dedicated to start to pay down the County’s $6.5 billion in pension obligations and to fund infrastructure projects.
The Civic Federation, is an independent, non-partisan government research organization that provides analysis and recommendations on government finance issues for the Chicago region and State of Illinois would like to see more efficiencies and consideration of a broader mix of revenue options including fees and possibly the County’s property tax levy.
VP and Research Director for the Civic Federation Sarah Wetmore explains, “People who have lower income pay more of discretionary income on things that are subject to the sales tax. There was a study that was conducted by The Institute Taxation and Economic Policy (ITEP) that showed that lower income residents paid a higher percentage of their disposable income through the sales tax than higher income residents.”
Preckwinkle will consider a rollback of the levy if the Illinois General Assembly approves the state pension plan. With the present standstill between house Democrats and Governor Rauner, the county would have to submit a new tax to the Illinois Department of Revenue by October 1 for the first half of 2016.
Board members were split on passing the sales tax increase and the opposing side did not hold their tongue. Some veteran commissioners were sharp and adamant at the importance of this tax increase such as Commissioners Jerry “Iceman” Butler, Jeff Tobolski and Finance Committee Chair John Daley. Other members feverishly opposing the increase included board members; Bridget Gainer, John Fritchey and Richard Boykin—whose long winded speeches seemed to make his colleagues more agitated. Boykin, who serves the West Side and Western Suburbs, used up his time defending his proposed program proposals as well as accusing Preckwinkle of not presenting a fiscal 2016 budget in order to support the 1 percent sales tax.
By the time the smoke cleared the following board members voted yes: Luis Arroyo, Jr., Jerry Butler, John Daley, Jesus Garcia, Stanley Moore, Joan Murphy, Deborah Simms, and Jeff Tobolski. Members that voted no included: Richard Boykins, Gregg Goslin, Bridget Gainer, JohnFritchey, Tim Schneider, Pete Silvestri, and Larry Suffredin. Commissioner Gorman voted ‘present’ and will enter the private business sector, leaving office by the end of July.
Since being in office Preckwinkle has made some drastic changes, including slimming down work days for county employees, expanding the awareness of the Affordable Care Act under County Care as well as cutting down the number of jail mates on minor misdemeanors. It’s no secret that there were deep budgetary problems before her administration. This latest chapter on her watch is a pill that she sadly must swallow because it’s not ‘what you do’, it’s ‘how you do it’.
To the residents of Cook County, no matter how pretty you dress up the sales tax increase—it’s still an increase, an increase that will hit each resident in every retail store, automobile repair, prescription medication, grocery and dining experience purchase.
As Governor Rauner’s budget cuts smash programming for mental health and HIV facilities, child care, home care workers along with multiple community and youth base programs—we ask the question. How will this Cook County sales tax increase affect us?
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