Evanston city officials, facing a preliminary projected budget gap of $3.5 million for 2020, are considering boosting the home rule sales tax by a quarter percentage point to help plug the hole.
At a City Council meeting last week, finance division staff outlined anticipated spending increases totalling about $4.5 million for 2020:
- Union-negotiated pay hikes for city workers of $1.6 million,
- Increased Illinois Municipal Retirement Fund contributions of $600,000,
- Health insurance cost increases projected at $176,000,
- Debt service payments for the Crown Center of $637,500, and
- Additional set-asides to raise the general fund reserve of $1.5 million.
The only reasonably sure thing in the way of new revenue for the city next year is up to $1 million in additional funds from the state motor fuel tax, which was doubled by the state legislature in a law that took effect last month.
Raising the home rule sales tax from the current 1% to 1.25% would boost the total sales tax paid on purchases in Evanston from 10% to 10.25% and bring in an estimated $1.5 million in new revenue.
In proposing the hike, city staff noted that several neighboring communities already charge more than Evanston. The rate in Chicago, Lincolnwood, Niles and Skokie is already 10.25%
But the rate is 10% in Wilmette and 9% in Glencoe.
In some nearby towns the rate varies by business district -- from 9.75% to 10.75% in Glenview and from 10.25% to 10.5% in Morton Grove. And in Northbrook you pay 10% south of Lake-Cook Road and 8% to the north.
Sales taxes are generally considered a regressive form of taxation -- in that lower income people spend a higher proportion of their incomes on items subject to sales tax than higher income people do.
But municipalities in Illinois have few options for progressive taxes, and Evanston aldermen, who generally consider themselves progressives, raised no objection to the sales tax hike during the meeting, although they did reject the idea of installing red light or speed cameras in town as a new revenue source.
For the sales tax hike to take effect by Jan. 1 next year, the aldermen will have to adopt it before Oct. 1, which means it's likely to be high on their agenda when they return in September from the Council's August recess.