While the Evanston City Council has only limited taxing authority, it can always ask the Illinois State Legislature to raise or lower taxes. On two separate occasions at the May 12 City Council meeting, Council members asked the State to either increase taxes or allow an expiring tax to remain in place in order to preserve services.
Tax on Wireless Service
The increases requested would find a way to tax something other than rapidly disappearing land-line phones to pay for 911 centers and the controversial State income tax increase set to expire in part in 2015. In both cases, Council split its vote, as several members expressed a reluctance to trust Springfield with Evanston tax dollars.
The 911 resolution stated in part: “The City of Evanston supports State legislation to permit local governments to assess the same fee already approved by voter referendum for land-line telephones to be applied to all devices that access the 911 system.” The move is preventive rather than necessary right now because the 911 fund currently has a balance of more than $1 million, current taxes generate about $1 million, and the systems costs about $1 million per year to operate.
The fear is, though, that as landlines continue to disappear, taxes generated from the 911 land-line surcharge will continue to slide, leaving a future hole in the budget larger than the $126,000 that Council transferred out of the 911 fund into the General Fund over the past two years.
The opposition’s apprehension was explained by Alderman Don Wilson, 4th Ward. If the State increases taxes on wireless lines, he said, “it will be a State tax, it will be collected by the State. I don’t have a high degree of confidence that we’ll get all of it.” Now the Illinois 911 tax on wireless devices is $0.73 per month and the City gets $0.57 of that. The landline surcharge is $1.50 per month.
“When a state collects a tax they can do whatever they want with it,” said Ald. Wilson. He said he would be more comfortable supporting an actual piece of legislation that set out where the collected funds would go. “I hesitate because we don’t have any legislation before us.” He added that his concerns about Springfield did not extend to the legislators representing Evanston, whom he praised as effective and dedicated.
Alderman Judy Fiske, 1st Ward, said that cellphone taxes were already too high – up to 15% – and a “burden on those using cellphones.” She also said she did not think a request for State cellphone taxes “appropriate for a vote from the Evanston City Council.
Alds. Fiske and Wilson stood alone. Alderman Jane Grover, 7th Ward, said the resolution sought an increase in a “pass-through revenue source [that] comes back to us to support 911 operations” and that the resolution sought changes to the tax code that “reflect the shift in how we use our phones.”
Alderman Ann Rainey, 8th Ward, said, “Another way to look at it [is] the people who call 911 on the cellphones need to pay” for 911 operations. According to the staff memo accompanying the item, 66% of 911 calls came from cellphones last year. “If we don’t support this, shame on us,” said Ald. Rainey.
Ald. Coleen Burrus, 9th Ward, said that while she understood Ald. Wilson’s hesitation, she has not “seen an issue with this particular tax not coming back” to Evanston.
The final vote was 7-2 in favor of asking the State to increase cellphone taxes to cover 911 operations.
State Income Tax
Next, Council voted to support keeping the “temporary” increase in state income taxes beyond their sunset date of 2015. State personal income taxes increased from 3% to 5% in 2011 in the midst of a severe budget crisis. The legislation established a temporary increase that would, by law, roll back to 3.75% in 2015 (the corporate tax rate went from 7% to 9.5%, to roll back to 7.75%.)
The staff memo said what is common knowledge in the State: The budget crisis has not gone away, and if the income tax rolls back, then the State will have to cut funding for services residents expect.
“Without the continuation of the revenues to help balance the budget, cuts for this year could total just over $450 million affecting schools, social services, and funding to municipalities through the Local Government Distributive Fund (LGDF),” wrote City Manager Wally Bobkiewicz in the memo.
Ald. Wilson again led the dissent. “I think we should be telling [State legislators], ‘It’s not OK for you to tell people you’re going to do one thing” then change course by keeping the increase.’ I refuse to say it’s OK. To me, [this resolution] is a message that it’s OK, and it’s not.”
Others saw the situation differently. Ald. Grover said, “I agree with the impulse and the need to send a message to Springfield.” Other concerns took higher priority, though. There is an “issue of the State’s being able to pay off unpaid bills… [and] the State of Illinois’ fiscal health.
“I don’t see that I have a choice. To me, reform and the extension of the State income tax are two different issues and I support them both,” she said.
Mayor Elizabeth Tisdahl disagreed with Ald. Wilson on one major point. He said the State would vote to keep the tax regardless of whatever resolutions the City Council of Evanston passed. “I just don’t see Springfield the way you do,” said Mayor Tisdahl to Ald. Wilson. “You think they have to [keep the tax increase] and will. They may not.”
A fear of a cut in State-funded services drove Mayor Tisdahl, she said. “This is in no way tied to the local government distributive fund,” she said, but instead tied to a conversation she had with the City’s Director of Health Evonda Thomas-Smith. “Evonda came to me and told me we would lose people from the Health Department” because of State funding cuts that would result from the expiration of the State income tax increase, the Mayor said.
In the end, the State’s fiscal health and the fear of service cuts prevailed over the desire to send a message to Springfield. Ald. Rainey joined Alds. Wilson and Fiske in voting no, but the resolution passed 6-3.