Shell Game

How much longer will the county be relying on the misguided use of the RTA Tax to balance the budget? This is the question I asked on October 19, 2014. In a letter sent to DuPage County Chairman on September 29, 2015 I asked a rhetorical question, what percent of the RTA sales tax is going to the transportation budget?

 

Time and time again we hear how DuPage County has held the line on property taxes. How has DuPage been the only county to figure out how to keep the property tax levy flat for the past 6 years and keep the county in the black? It’s a shell game.  In January of 2008 the RTA sales tax rate was increased by 0.25% in Cook County and by 0.50% in the Collar Counties. Proceeds of the sales tax increase in the Collar Counties are divided evenly between the RTA and the county where the tax is collected. The proceeds awarded to the Collard Counties can be only utilized for transportation and/or public safety.

 

While the other Collar Counties which include Kane, Lake, McHenry and Will, rely on property tax as their major source of revenue, DuPage County’s largest source of revenue is sales tax. Currently 56.8 percent of the DuPage County’s revenue source is sales tax, which includes the RTA sales tax that can only be utilized for transportation and/or public safety.  It might sound like a good idea to use sales tax as the largest portion of revenues but it is also very dangerous. In September of 2016 Moody’s downgraded DuPage County’s AAA rating. Crain’s  Chicago Business reporter Greg Hinz reported the following “The downgrade reflects Fitch’s concern (about) the county’s limited revenue flexibility and slow revenue growth prospects,” the New York firm wrote. “(Fitch’s) revised criteria placed increased focus on Fitch’s expectations for the natural pace of revenue growth without revenue-raising measures and the ability of an entity to independently increase revenue.” In general, Fitch said it expects revenue from existing taxes to grow “slightly below historical trends” and generally only in line with national inflation. “While sales tax revenue has growth between 4 percent and 5 percent annually over the past several years, it has slowed to only 1 percent growth in fiscal 2016, leading the county to change its growth assumptions going forward to only 2 percent growth.”

 

During the January 9, 2018 meeting of the DuPage  Finance Committee, I requested a time frame for a discussion to take place regarding revenues. We finally started the discussion during the May 22, 2018 DuPage County Finance Committee meeting. There was a lot of discussion; Member Don Puchalski commented that all of the collar counties Kane, Lake, McHenry and Will use the RTA for transportation, which according to the legislation is an appropriate use of the funds. None of the RTA sales tax is used for transportation in DuPage County. Member Puchalski is the Chairman of the Transportation Committee, you could hear the frustration in his voice. The RTA tax is  integral to the funding of our roads and public transit. Member Puchalski asked for further discussion on the use of the RTA sales tax and I agreed. I asked if the reason the county was able to keep the property tax levy flat was due to our reliance of the RTA sales tax to balance the budget? 

 

We’ve seen this movie before in DuPage County. It happened at the DuPage Water Commission. The quarter percent sales tax was to be used to pay off the 150 million dollars in General Obligation Bonds.  That is how the referendum was presented to the citizens of DuPage County. Rather than use the sales tax to pay down the debt the DuPage Water Commission used the sales tax to stabilize water rates to the Commission Charter customers.  The rate that the Charter Customers (municipalities) paid for water during the inception was 1.95 per thousand gallons.  The rate the  Commission customers were paying was dropped to 1.45 per thousand gallons of water and eventually lowered more. Besides lowering the water rate the sales tax was used to dish out rebates to the Charter Customers (municipalities) in the amount of 66.3 million dollars. I had serious concerns, whether the savings from the rebates or rate reductions were passed on to the citizens. I also had serious concerns that the loss from regular operations had been steadily climbing and at some point would overwhelm the sales tax and income investment income. That’s exactly what happened.

 

Some good news came out of the May 22nd Finance Committee Meeting when the majority of the board agreed that we need to hold a special call meeting to continue the revenue discussion.

 

Shell Game Information here. 

More information on Don Puchalski here.

RTA Sales Tax  Legislation Information here.

Crain’s Chicago Business – Moody’s Information here. 

January 9, 2018 Finance Meeting Minutes here.

DuPage Water Commission Information Below

DuPage Water Commission Faces Dissolution By State

Liz Chaplin

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