As a possible method of helping to solve the district’s financial issues, the SD308 Board of Education heard a proposal Tuesday evening on the benefits of the County School Facilities Sales Tax, first established by the state in October of 2007. Almost 50 percent of counties in Illinois currently use the tax successfully, including Williamson and Champaign counties.
As described by Anne Noble, managing director of Stifel, a brokerage/investment banking firm, the tax is the, “First shift away from property taxes for local dollars for school funding.”
“This is giving you one option that is shifting away from the reliance on property taxes, and is the first time that school districts have had any access to sales tax revenue in the state of Illinois,” Noble said.
The sales tax, when proposed by a district, allows for voters to approve up to a 1 percent (one cent) sales tax in quarter-percent increments to be used specifically and only for the funding of school construction or maintenance projects. The funds cannot be used for matters including textbooks, salaries and overhead, or operating/instructional costs.
Noble referred to the tax as a "Walmart Tax," meaning that items purchased at Walmart (with the exceptions of any kind of medicine or unprepared food like bread or milk) would be included in the tax. Items not included in the tax include services, automobiles, boats and RVs, mobile homes, farm equipment/parts/inputs.
“If it is not currently taxed, it will not be taxed,” Noble said. “It’s a retail sales tax, so it only taxes things at the retail sales level.”
The funds can be used to support the district through making payments or abate current building bonds, to replace the use of property taxes revenue on bonds, or to issue new bonds for capital purposes. The use of the funds is up to each district in the county.
“While you can’t look at this as a solution for an overall deficit... it can indirectly help you, because this money can be used to take on expenditures that you are currently spending,” Noble said.
Revenue would be distributed equally, based on actual fall enrollment in the county, to every pupil who lives in the county and attends public school, no matter where the student lives. A student could live in Kendall County, Noble said, but attend school in another county, and the money would follow the student.
To pass the sales tax in the county, the board of education would first have to pass a resolution. When school districts representing more than 50 percent of resident student enrollment in the county all adopt the same resolution, the ballot question must be certified by the regional superintendent of schools.
Board member Brent Lightfoot questioned this, asking if the district would need to coordinate with the other districts in Kendall County. Noble encouraged this, saying that the support of multiple districts would be essential, as the question would be on the ballot throughout Kendall County.
As SD308 has at least 50 percent of the students in the county, Noble mentioned that SD308 could decide to put the question on the ballot independently, but as the vote is countywide, Noble stressed the importance of communicating with districts, voters and constituents about what the tax is and why it is on the ballot.
The most common success stories for counties, Noble said, come when the information is not solely centered on abatement. Boone County was the sole county to pass the tax on the message of, “If you pass this, we will lower your property tax.”
Lightfoot questioned Noble as to whether the decrease in property taxes would offset the increase in sales tax, and what the effect would be on the average family. Kendall County, Lightfoot mentioned, is the highest-taxed county in the state.
“Obviously, you’re hoping that people who don’t live in the county do some shopping in the county, and help pay for the schools even though they don’t live in that county,” Lightfoot said.
Noble said that it was hard to determine that effect, as it would change based off of the spending habits of individual families.
Board Secretary Jared Ploger pointed out the existence of "Walmart deserts" in local counties, which force outside residents to come to Kendall County to do their shopping, mostly along the Route 34 corridor that features Walmart, Meijer and Target.
Noble said that the sales tax does not exist as a way to get those from outside the county to finance Kendall County schools, but, “It is a point of people outside of Kendall County do shop here, and they will pay that sales tax.”
The board ultimately agreed to draw up a set list of projects and issues that the revenue earned from the sales tax would go towards if it is approved, before approaching other school districts in the county in early 2018. The board and administration will also work to gauge public interest in the potential tax.
“We can approve to put it on the ballot, but ultimately our citizens ... have to go out and pass it themselves,” board member Matt Bauman said.
If the question does make it onto the ballot, when the revenue comes to the district would be determined based on when the question is voted on. If the question is on the March 2018 ballot, then revenue would be received in October 2018. If it is on the November 2018 ballot, then revenue would not be seen until October 2019.