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Plan to triple sales tax draws watchdog fire.

Wednesday, September 26, 2007
Crain's Chicago Business

The head of a Chicago government watchdog group is strongly criticizing a proposed sales tax hike that, as soon as Monday, could give the city and Cook County the highest sales tax in the country.

In unusually blunt language, Civic Federation President Laurence Msall said the “stampede” by some members of the Cook County Board to more than triple the county’s levy on sales constitutes “an absurd approach to managing government,” in which officials demand more money without even presenting a budget as to how they’d spend it.

But a spokeswoman for County Board President Todd Stroger said the county does need more money and made it clear the president will push for action at a series of meetings scheduled for Monday if he thinks the votes are there for approval.

“(Mr. Stroger) is in support of any type of revenue increase. This is one kind,” the spokeswoman said. Mr. Stroger himself was not available for comment.
The pending hike was quietly proposed by Commissioner Joan Murphy and others a few weeks ago but drew little notice until this week, when Mr. Stroger abruptly called a special board meeting to consider approval for next Monday.

The proposal would boost the county’s existing sales tax on purchases in Cook County and the use tax on out-of-county purchases from 0.75% to 2.75%, yielding an estimated $1 billion a year, according to board members — far above the roughly $300 million hole the county expects to have to fill in its budget for the fiscal year that begins Dec. 1.

Mr. Stroger has not yet introduced his budget, and Mr. Msall says he ought to do so before asking for higher taxes.

“It’s inappropriate and illogical to be discussing tax increases before you disclose or propose your spending plans,” Mr. Msall said. “You have to justify taxes.”

Mr. Stroger’s spokeswoman said the county is considering acting now because state law requires 90-day notice for collecting higher sales taxes. If a new tax rate is to go into effect on Jan. 1, it must be approved no later than Monday, she said.

But Mr. Msall said “nothing is hindering” Mr. Stroger from unveiling a budget now, so voters can gauge “whether the tax increase is needed and what it’s going to be spent for.”

Mr. Msall said he doubts that the county, which has an operating budget of about $3 billion, can justify raising revenues 33%, as the pending plan would do. “To take an action which would give the city and county the highest sales tax in the county (11%) is an action the county should rethink,” he said.

Meanwhile, County Board Finance Committee Chairman John Daley, a key ally of Mr. Stroger’s, said he’s “willing to look at” the proposed two percentage point sales tax hike, but he held open the possibility of a lower figure or repealing the hike after a period of time.

“I believe there is a need for some new revenue,” said Mr. Daley, pointing to $100 million in union salary hikes that were approved 17-0 by the board. But if the county doesn’t need $1 billion in new money “you could amend it . . . impose a sunset” or raise some other taxes instead.

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