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Evanston City Council members narrowly approved a quarter percent hike in the home-rule sales tax on Sept. 23, with several aldermen expressing concern about the impact the increase could have on local business.
Aldermen voted 5-4 in support of hiking the home-rule sales tax on general merchandise from 1% to 1.25%, raising the combined total sales tax rate to 10.25%.
Voting for the hike were Aldermen Peter Braithwaite, 2nd Ward; Melissa Wynne, 3rd Ward; Donald Wilson, 4th Ward; Robin Rue Simmons, 5th Ward and Eleanor Revelle, 7th Ward.
Voting against the tax hike were Aldermen Judy Fiske, 1st Ward; Thomas Suffredin, 6th Ward; Ann Rainey, 8th Ward and Cicely Fleming, 9th Ward;
The increase places the City on par with Chicago, Skokie, Morton Grove, Lincolnwood and Niles, all at 10.25%, but above communities such as Wilmette, Northbrook, Des Plaines, Oak Park and Arlington Heights and Park Ridge, all at 10%.
The tax had to be passed by the Council and filed with the Illinois Department of Revenue by Oct. 1 in order for the new rate to be effective Jan. 1, 2020.
General merchandise includes most personal property, such as food purchased at a restaurant, officials noted. Food bought at a grocery store, though, is taxed at a lower rate.
Officials estimate the increase will generate new revenue of $1.5 million, giving the City an early revenue source to close any budget gap when deliberations begin later this year.
At the Sept. 23 City Council meeting, Ald. Suffredin asked that the item be removed from the consent agenda, where items can be passed without discussion.
“I think we should be really careful about doing this,” he said, opening discussion. “Along with our downtown parking problems this is just another reason for people to spend their money elsewhere.”
“The sales tax is the most regressive tax,” Ald. Suffredin said.
Other aldermen, even those reluctantly supporting the increase, did not necessarily disagree with that view.
“These are regressive taxes,” Ald. Wilson said. “But. at the same time. I’m totally mindful of the fact that when it comes to the time to do the budget we will never pass a property tax or other tax increase.
“The fact of the matter is, every year, everything costs more,” he said.
Even if the City were to stay the same, with no change in services, he said, the City would still need $6 million every year “to find or cut,” based on a 2% inflation rate.
“And that’s why we struggle every year. So we’re not bad people – — we’re not trying to hurt people; we’re just trying to do the responsible thing,” said Ald. Wilson.
On the other side, he indicated he would not be willing to increase the liquor tax should that conversation come up during the budget process because that would be “piling on.”
“So not tonight, but at some point in the future I’d like to just maybe drop it down,” he said.
Ald. Wynne agreed about the regressive nature of the sales tax. She said, “But short of a property tax increase, and some of our other alternatives – I mean, we increased parking left and right last year and we are endlessly hearing now how difficult that has made things for some people.”
If there “is any possible advantage I can see in this is that this captures non-Evanstonians who are spending money here, whereas if we increased the property tax that is only Evanstonians.
“I wish there were ways we could figure out revenue streams,” she said, “but at least somebody driving on from Highland Park is going to pay for this so I’d rather do that.”
But Ald. Rainey said, “Whether you live in Highland Park and shop in Evanston or you live in Evanston and shop in Evanston, it gets everybody.”
“We can’t keep identifying ways to spend money without identifying places to save money,” she said.
“I hate the idea of doing this. Some of the restaurants in this town are my favorite people. [If] we add one penny to their liquor tax they’ll go crazy,” Ald. Rainey said.
Similarly, Ald. Fiske said the tax hurts small business – “the very businesses we are trying to get to stay. And to think the shoppers don’t recognize they are paying more is ridiculous, because they notice parking, they notice sales tax, and they look at their options.”
Ald. Fleming expressed concern about the funds going into the General Fund, creating a kind of blank check for their use.
Ald. Fleming said she would be more comfortable designating some of the increase toward affordable housing “or something our residents would be passionate about and doesn’t have a steady stream of money coming in to meet the needs.”