New taxes on businesses part of Preckwinkle’s budget
Thursday, October 18, 2012
by Jake Griffin
Cook County businesses buying goods outside the county would be subject to a new tax under Board President Toni Preckwinkle’s proposed budget.
Preckwinkle’s budget plan calls for a 1.25 percent tax on businesses that buy “non-titled” items like office supplies, equipment, building materials and even artwork from outside the county’s borders.
The new tax is expected to generate $15 million in the coming year. It is similar to a tax the county already levies for purchasing titled items like cars, boats and other vehicles.
Preckwinkle labeled the new tax pro-business because it motivates business owners to buy locally.
But some area business leaders were concerned about the effects of the new tax.
“I think it could certainly pose a problem,” said Mindy Phillips, executive director of the Palatine Area Chamber of Commerce. “To be penalized if you don’t, or can’t, for some reason buy in Cook County, I could definitely see it being a hindrance.”
But county officials noted that a similar tax is employed by the state and city of Chicago.
County businesses would be allowed to purchase these goods up to $2,500 without any penalty, county officials said. The businesses are responsible for self-reporting the purchases to the county’s revenue department. A Preckwinkle spokesman said the county expects most businesses will comply.
“It hurts the business more to get caught not paying taxes than to make sure they are dotting their i’s and crossing their t’s,” said Owen Kilmer.
Commissioner Tim Schneider, a Bartlett Republican, said the county should avoid new taxes.
“We should create an environment that would have less taxes and increase the number of businesses that want to buy inside Cook County and thereby increase sales,” he said.
County officials also believe the new tax turns the tide for business owners at the edge of the county who had griped about the county’s 1 percent sales tax increase adopted nearly four years ago because they believed it would send customers to other counties to avoid the higher cost. With the start of 2013, the county will have completely eliminated that increase implemented under Preckwinkle’s predecessor, Todd Stroger. And the new tax will give Cook County businesses an incentive to buy within the county’s borders, they said.
The tax is among several initiatives Preckwinkle announced Thursday during a budget presentation, which also called for an additional $1 tax per pack on cigarettes, a 5-cent tax on bullets and an additional $25 tax on gun purchases.
“We’re proposing (these taxes) to subsidize health care,” Preckwinkle said. “Cigarette smoking is the No. 1 cause of preventable disease and gun violence is incredibly expensive.”
The cigarette tax is expected to generate $25.6 million additional revenue in the coming year, and the taxes on guns and bullets are anticipated to bring the county an extra $1 million over the course of 2013.
The $2.95 billion operating budget is almost $40 million less than last year and includes the elimination of 462 positions. Most county agencies are expected to take operational cuts, but public safety, judicial and property tax operations will receive greater funding over the current year, according to Preckwinkle’s budget presentation. Sheriff Tom Dart’s budget is expected to increase 5 percent, amounting to a $20 million spike in costs.
Preckwinkle said the increase is mainly due to staffing costs and a higher jail population. Preckwinkle said the county is hoping to institute initiatives that lower the jail population. She suggested better bond court procedures that enable suspects to post reasonable bail amounts and increased use of electronic monitoring for nonviolent offenders awaiting trial. She said the current system in unfair to the poor and minorities.
“We’re doing something terribly wrong,” Preckwinkle said. “If you went to the county jail, you’d think the only people in Cook County were black or brown, because that’s all who’s in there.”
The chief judge’s budget increase of nearly $3 million to $135.5 million reflects staffing increases. Technology upgrades at the assessor’s office and board of review are driving higher budgets at those agencies, Preckwinkle said.
Treasurer Maria Pappas’ office is seeing one of the deepest cuts. Preckwinkle, with Pappas’ blessing, is shaving 18 percent of the treasurer’s budget.
“Because of our ongoing technological improvements, we make corporate and personnel cuts without compromising service,” Pappas wrote to Preckwinkle ahead of Thursday’s budget presentation.
The county is expected to hold the line on property taxes, maintaining a levy of $720 million, unchanged since 1996, Preckwinkle said.
Last year, Preckwinkle proposed creating several “special service areas” in unincorporated parts of the county to cover costs of providing police and road services to those residents. However, the plan was quickly abandoned in favor of creating a task force that would look for ways to have neighboring municipalities absorb those parcels.
Preckwinkle said the county is setting aside $5 million this year to partner with municipalities to build infrastructure in those unincorporated neighborhoods and get them in compliance with municipal zoning laws. The municipalities could either forcibly annex the properties or come to agreement with the property owners. However, to receive these matching grants from the county, the unincorporated land would ultimately have to be annexed into a town, county officials said.
Entering her fourth year as president of the county board, Preckwinkle said managing budget gaps has grown increasingly difficult.
“We’ve done the obvious things,” Preckwinkle said. “We’ve got structural problems and we’ve got to find structural solutions instead of one-time fixes.”