Rockford School Board gets crash course in potential sales tax as it builds future capital plan
By Kevin Haas
Rock River Current
Get our mobile app
- See our Q&A on the school facilities sales tax at the bottom of this article.
ROCKFORD — Rockford School Board members this week got a crash course in how a voter-approved sales tax could be used to pay for capital projects, something advocates of the tax say can reduce the burden on property tax payers.
A countywide sales tax for school facilities is in place in 57 of the 101 counties in Illinois, including in neighboring Boone County, which approved a 1% sales tax in April 2013. It has been defeated by voters one or more times in 23 other counties, according to information from Stifel Public Finance.
Related: Rockford School Board sets property tax levy. Here’s what it could mean for your bill
School board members here aren’t weighing whether to put the measure on the ballot yet, but they were given a presentation on the tax this week so they understand their options as they work to create a new five-year facilities master plan that will go into effect in summer 2025.
“We’ve got a lot of new board members,” said Greg Brown, the district’s chief financial officer. “As we’re onboarding these new board members over the next year or so, we’re just trying to make sure they know and understand that there’s lots of different options besides just property taxes to actually fund schools.”
The district has cash available to start funding its next facilities plan, but as it gets to the later years of the plan officials may have to consider borrowing money or implementing a sales tax, Brown said.
“It’s just making sure that we have an array of options so we can potentially make the decisions that are best for the school board, the school district as well as the taxpayers,” said Tiana McCall, vice president of the Rockford School Board. “I would just like to weigh the options to see what’s the best fit for our district and our community.”
The Rockford School Board controls whether the measure should be put to voters. That’s because state law dictates that school boards representing at least 50% of public student enrollment can vote to put the measure on the ballot. Rockford Public Schools alone account for more than 60% of enrollment in Winnebago County.
“Sales taxes are not a great way to fund government services of any type, generally speaking. They’re regressive more than most taxes,” board member Paul Carpenter said. “… While I’m not a fan of sales taxes, it would be up to the voters to decide whether to enact it, and if the consensus among RPS board members, and other districts’ boards is to put it on the ballot, I would not oppose that.”
More news: Why Capri decided to relocate to Loves Park and how Rockford tried to convince them to stay
A 1% sales tax could generate about $37.7 million in revenue for the 14 school districts that touch Winnebago County. The lion’s share of that money, about $24 million, would go toward Rockford Public Schools.
That would be enough revenue to abate the portion of the district’s property tax levy dedicated to debt and interest and still utilize about $10 million per year toward school improvements and other approved uses, according to Brown.
More news: Ripe Life Juice Co. is preparing for its Rockford comeback in early 2024
Waiving that portion of the district’s property tax levy is estimated to save the owner of a $100,000 home about $170 annually, based on the current levy.
Brown was the chief financial officer for the Belvidere School District when Boone County voted to enact the sales tax. The district committed to using the money to abate property taxes.
Revenue from the sales tax can only be used for capital projects such as roof repairs, new buildings, demolitions and additions. It can also be used for school resource officers and to support the mental health needs of students.
The district is now working on the process to identify its biggest areas of need in its buildings. That work will culminate in the creation of a five-year facilities master plan, which will guide the district’s capital improvements from 2025-2030.
Q&A | School facilities sales tax
What is the county school facilities sales tax?
A law went into effect in October 2007 that allows counties in Illinois to enact a sales tax of up to 1% (in 1/4% increments) for school facility projects.
The tax does not apply to automobiles and ATVs, farm equipment, groceries, mobile homes, prescription medication and over-the-counter drugs and services.
Is it used in other communities?
There are 57 counties in Illinois that have implemented the sales tax. The closest is Boone County, where voters approved a 1% tax with 65% of the vote in April 2013.
There are 23 other counties in Illinois where voters rejected implementing the tax. Winnebago County is one of 21 in the state where it has not been put up for a vote.
How can the tax revenue be spent?
The money must be used for school facility purposes such as new facilities, additions and renovations, technology infrastructure, demolition and repairs. It can also be used to pay off debt issued for capital projects or to abate property taxes tied to capital expenses.
The revenue can also be used for mental health professionals if that’s specified on a ballot question.
The money can’t be used for salaries, direct instruction cost or equipment such as computers, furniture and other fixtures.
Will it decrease property taxes?
The sales tax can be used to reduce property taxes in two ways:
- Reducing existing taxes: A school district can reduce property taxes by using sales tax to pay off existing bonds for capital projects.
- Avoid future taxes: The district can avoid increasing its property tax levy by using sales taxes to cover the cost of building projects that would have been funded by property taxes.
How much revenue would it generate?
The sales tax would generate about $37.7 million annually, and about $24 million of that would go to Rockford Public Schools.
How is the revenue shared?
The revenue from the tax would be shared by the 14 school districts in Winnebago County with the money being divided based on enrollment.
Rockford Public Schools would get the lion’s share of the revenue with about $24 million. The Harlem School District would get the second most with nearly $5.4 million and Hononegah School District third with $1.6 million.
How would it be put into place?
School boards within the county must pass a resolution to put the matter before voters.
Those resolutions must be approved by school boards in the county representing at least 50% of the student enrollment. They must also approve of consistent ballot language. Then, the regional superintendent will certify the question with the county clerk to be put on the ballot at the next election.
In the case of Winnebago County, Rockford Public Schools represent more than 60% of total enrollment so a vote by the Rockford School Board could bring the matter to voters.
What would the ballot question say?
“Shall a retailer’s occupation tax and a service tax occupation tax (commonly referred to as a “Sales Tax”) be imposed in Winnebago County at a rate of ____ % to be used exclusively for school facility purposes, school resource officers, and mental health professionals?”
Source: Stifel Public Finance
This article is by Kevin Haas. Email him at khaas@rockrivercurrent.com or follow him on X at @KevinMHaas or Instagram @thekevinhaas and Threads @thekevinhaas
