With Cook County facing a pension fund shortfall of $6.5 billion — a hole that may be deepening by about $30 million a month — County Board President Toni Preckwinkle has proposed a 1-percent increase in the county’s sales tax.
Although Preckwinkle opposed the tax increase when she ran for board president against Todd Stroger in 2010, ultimately repealing it in 2013, she said circumstances have changed.
“I don’t think we should kick the can down the road, as people like to say, and foist these problems off on our children and grandchildren,” Preckwinkle told the Chicago Tribune recently. “I think the responsible adult thing to do is address the issue yourself.”
Preckwinkle noted that the county’s pension problem puts it in the unenviable position of choosing between two evils: either raise property taxes or raise the sales tax rate.
“There was no appetite — zero appetite — for a property tax increase, and we’re going to work hard to get nine votes for a sales tax increase,” Preckwinkle said.
In order to raise property taxes, the measure requires a three-fourths supermajority of the board’s 17 commissioners.
According to the Tribune, if the board approves the so-called “penny tax,” the increase would go into effect Jan. 1 and bring in an estimated $473 million.
But that increase in revenue could come at the expense of small businesses and customers considering capital purchases in Oak Park, said Cathy Yen, executive director of the Oak Park-River Forest Chamber of Commerce.
“The tax won’t hugely affect somebody buying a cup of coffee, or going to restaurants or convenience stores, but it’s really going to affect major purchases that drive the sales tax,” she said.
“So, if I’m going to buy a refrigerator, I’m not going to buy it at Grand Appliance on Madison Street in Forest Park, I’m going to go to DuPage County and buy it,” Yen said. “That’s a huge chunk of change if you’re collecting sales tax. Definitely, in Oak Park and River Forest, we can get to DuPage in 10 minutes. Maybe it’s not so easy in Hyde Park [where Preckwinkle lives], but this will ultimately drive the county’s revenue down.”
The base sale tax rates in DuPage, Lake and Will counties are 7.25, 8 and 7 percent, respectively.
Cook County Commissioner Richard Boykin (D-1st), who represents Oak Park and Forest Park, echoed Yen’s sentiments, adding that’s the sales tax increase would also disproportionately burden poor residents.
Boykin said he doesn’t believe the county’s pension system is in a fiscal crisis and would like for Preckwinkle to put forth a 2016 budget before considering a sales tax increase, which he said should be levied only on certain goods and services.
“It’s a false choice — you don’t have to choose between increasing the property tax and increasing the sales tax,” said Boykin, who added that he’s against undergirding the county’s pension system with sales tax revenue.
“The sales tax is the most regressive tax ever,” Boykin said. “It hits the poorest of the poor. It means that kids who go into the store to buy a candy bar don’t pay the same kinds of taxes as a wealthy person.
“The poor haven’t had a cost of living increase in their wages. If this tax goes through, we’ll have the highest sales tax in the country at 10.25 percent.”
Boykin said he believes Preckwinkle doesn’t want to fight lobbyists who might vigorously oppose more targeted revenue options, such as the county’s hotel/motel tax.
“The hotel/motel tax hits people traveling to Cook County to do business, but they do that everywhere around the country,” he said. “Those are pretty high everywhere. At least you’re not hitting people who live here.”