Another View: Vote ‘No’ for 13.8 percent (‘1 percent’) increase in sales tax

In their last-minute desperate pleas for support for the proposed 1 percentage point sales tax increase, city leaders appear as if they’ve been watching too much Napoleon Dynamite.

In just the last couple of weeks, city administrators and aldermen have said the 1 percentage point sales tax increase will save people from falling debris from deteriorating bridges; rescue residents from the clenches of another “100-year flood”; help raise from the ashes Rockford’s long-neglected west side; and lower property taxes.

Or, as Napoleon Dynamite’s Pedro Sanchez would say, vote for their sales tax increase, “and all your wildest dreams will come true.”

In response, I prefer Del Griffith’s line from Planes, Trains & Automobiles: “If they told you wolverines would make good house pets, would you believe them?”

Sure, we all agree Rockford needs better roads. In fact, driving across town can often feel like off-road racing. But again, we come to that same question: Do you trust these city leaders with your money?

First, it’s kind of hard to put much trust in people when they constantly—and probably intentionally—use misleading language.

How many times have you heard city leaders refer to a “1 percent sales tax increase”? I hate to burst their hot air balloon, but the proposed sales tax increase is not a 1 percent increase—it’s a 1 percentage point sales tax increase.

The proposed increase would raise the current sales tax in the City of Rockford from 7.25 percent to 8.25 percent—a 13.8 percent increase in the sales tax. For reference, Chicago’s sales tax is 9 percent.

According to a Northern Illinois University analysis cited in the local daily, the average Rockford consumer spends about $10,000 per year on taxable merchandise, which includes everything but food, prescription drugs and titled vehicles. That means the average consumer currently spends about $725 per year in sales tax. Under the proposed sales tax increase, the average consumer would spend about $825 per year in sales tax.

Boiled down, the proposed sales tax increase would cost average Rockford consumers an additional $100 per year, or 13.8 percent more than the current sales tax costs them.

And let’s not forget the sales tax in Winnebago County (including the city of Rockford) was just raised 1 percentage point in 2002 to allegedly pay for a massive 1,212-bed jail in downtown Rockford.

With Rockford’s median household income of $37,667 in 1999, according to the 2000 Census, that means that prior to the first sales tax increase in 2002, the median household in Rockford was spending 1.9 percent of its income on sales tax—or about $725. After the jail tax was passed, the burden on the median household increased to 2.2 percent of its income—or about $825. If the proposed 1 percentage point sales tax is passed, that means the burden on the median Rockford household will increase to 2.5 percent—or about $925.

Overall, that means taxpayers will be spending about $200 more per year on sales tax than they did prior to 2002 as a result of a combined 28 percent increase in the sales tax in just five years!

Second, in the past, road improvements were paid for through bonds. As a result of the interest rate on those bonds, Rockford Mayor Larry Morrissey (I) said the city has accumulated more than $50 million in debt, which is being paid down through property taxes.

Morrissey said in his March 15 State of the City address that Rockford residents pay the highest property tax rate in the state for cities with a population of more than 70,000. For reference, nine other Illinois cities have a population greater than 70,000: Aurora, Chicago, Decatur, Evanston, Joliet, Naperville, Peoria, Springfield and Waukegan.

Morrissey said passage of the 1 percentage point sales tax increase will mean the property tax rate will eventually decline as the debt is paid down—as much as 24 cents in the first five years alone.

While this sounds great, and certainly gets plenty of support from property owners and property owner groups, the trade-off appears to be a 24-cent decrease in the property tax rate within five years and an immediate $100 increase in sales tax per year for the average Rockford consumer. The burden is just shifted from property taxes to sales taxes.

On top of this, everyone knows property taxes are affected by many variables. For example, remember when property taxes were raised to pay for all the expenses related to the “desegregation” of the Rockford Public Schools?

So, while lowered property taxes sound great, history in this town has proven that as soon as there is an opening at the public trough, it doesn’t take long for another pork project to come along to take its place.

Speaking of which, what will happen if the city can’t quite scrape up enough money for its end of the $20 million intergovernmental agreement to renovate the MetroCentre? Might they turn to property taxes to cover any possible gaps?

Bottom line, the 1 percentage point sales tax increase may take some of the burden off property taxes, but that burden is just shifted to those who pay sales taxes, which includes most property taxpayers.

Third, Rockford Ald. Pat Curran (R-2) shared an interesting observation at a recent Rockford City Council meeting. Addressing the proposed 1 percentage point sales tax increase, he said the city may have trouble selling the increase to voters when voters see their money being spent on roads that need fixing within just a couple years.

As an example, Curran cited a portion of Rural Street he said was constructed fewer than two years ago and is already “spider webbing,” or showing cracks in the concrete. Curran even questioned whether the companies the city contracts with to construct the roads are using the latest technology.

Absolutely! How many times have you driven around town, seen a road under construction, and then noticed how, within just a couple years, it’s already being worked on again? This should not be happening, and particularly not on the taxpayers’ backs!

Before we fork over any more money to the city for road “improvements,” the city needs to seriously address Curran’s concerns and ensure the road work we, the taxpayers, pay for is of the highest quality and will last more than two years without any major problems. Otherwise, it’s kind of like taking your car to a bad mechanic week after week or having a bad plumber come back week after week. Sure, the mechanic and the plumber are making plenty of money, but your car still doesn’t work and your toilet is still backed up—and you’re going broke in the process!

Maybe it’s time the city consider writing into its contracts with the road construction companies that if the road begins to crack or deteriorate within a given amount of time—say two to five years, or whatever is deemed reasonable—the company will be responsible for any of the costs of reconstruction or repairs. Kind of like a road quality guarantee. Heck, even a bag of pretzels from ALDI® comes with a “Double Quality Guarantee”—“Quality, performance and satisfaction are always DOUBLE guaranteed at ALDI®. If for any reason, you are not 100 percent satisfied with this product, we will gladly replace the product AND refund your money.”

Without a quality guarantee, what’s the incentive for a construction company to create a high-quality road—especially if there’s little or no competition in the bidding process for the contract? Ultimately, the construction company benefits from creating poor roads—they get to come back in a couple of years, get paid millions, and do it all over again—all on the taxpayers’ backs.

Maybe the city should raise its standards. If the city always takes the lowest bidder (if there is even a bidding process), maybe they are just getting what they pay for. And what about the influence these companies have over the mayor and the aldermen through campaign contributions? It’s no secret companies like Rockford Blacktop and William Charles, Ltd., and their officers have been heavy

campaign contributors to local politicians.

It’s time for taxpayers to stand up for their consumer rights. We hold the checkbook. Once we write the blank “1 percentage point increase” check, we lose our bargaining power. The issue of road quality needs to be addressed now, before any more money is poured into roads that are not of the highest quality.

Finally, getting back to the jail tax passed in 2002, remember all the promises county leaders made about how the new jail would lead to economic prosperity and raise from the ashes Rockford’s long-neglected west side? Doesn’t that sound a little like what city leaders are now promising will happen with the passage of the 1 percentage point sales tax increase for roads?

Of course it does! Where do you think they got those ideas?

After this same 1 percentage point sales tax failed a year ago, and Morrissey looked into the TV cameras and blamed voters for not supporting the tax (which they, at the time, knew little about because the city had not done a good job of informing them), city leaders went back to the drawing board. They needed a pitch to sell the sales tax increase. What better guide than a sales tax pitch that was successful? Oh, yes, that sales tax that passed in 2002! That would be a great guide!

The city learned two important tactics from the successful passage of the 2002 jail tax:

1. Incite fear in the public if the tax is not passed. With the jail tax, the pitch was if the tax failed, criminals would be spilling out into the streets. With the road tax, bridges will be falling down, and people will be drowning in floods. (By the way, where was the city in the nearly five months between the Labor Day flood and the time they offered “relief” in the form of “low-interest” loans?)

2. Promise voters all of their wildest dreams will come true. With the jail tax, the new jail was supposed to draw more businesses downtown and lead to economic prosperity. Apparently, the road tax is supposed to do the same, along with lowering property taxes.

As President George W. Bush would say, “Fool me once…shame on…shame on you. … If fooled, you can’t get fooled again.” Or something like that.

The county hoodwinked us in 2002 into supporting a 1 percentage point increase in the sales tax that voters now have no way of repealing, thanks to a 1996 law that was sponsored by state Sen. Dave Syverson (R-34, Rockford). Even though voters implemented the jail sales tax, only the county board has the authority to roll it back. As state statute (55 ILCS 5/5-1006.5) reads: “If a county imposes a tax under this section, the county board may, by ordinance, discontinue or lower the rate of the tax.”

The road tax proposed by the city, at least, has a five-year sunset clause. But it still doesn’t change the fact taxpayers will be spending $200 more per year on sales tax than they did prior to 2002, and that they will continue to see their money get flushed down the public trough to pay for subpar roads.

Before voters support any more funding for road improvements, they must demand the following of the city:

1. City leaders must work closely with Winnebago County leaders to ensure the excessive jail tax is rolled back. The jail is complete, and funds provided by the tax continue to be used for pork projects other than the jail. Once that tax is repealed, voters will probably feel a little more comfortable about the road tax, and the sales tax in Rockford would effectively stay at 7.25 percent (8.25 percent with the county’s jail tax added on). Asking taxpayers to pay 28 percent more in sales tax in just five years is excessive.

2. The city must initiate a road quality guarantee, or, in some way, ensure taxpayers are getting good quality roads for their money. This could help save taxpayers’ money in the future by limiting the number of roads that need to be repaired or reconstructed.

3. Earn our trust. Stop saying this sales tax is only a 1 percent increase. You’re really asking taxpayers to fork over about $100 more per year—$200 more per year than they did in 2002, when combined with the jail tax. That’s a lot of money for people whose median household income is $37,667.

from the April 11-17, 2007, issue

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