Category Archives: Taxes

City of Peoria, Taxes

New HIZ tax being collected all over Peoria

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Are Peoria businesses charging you too much sales tax? If they are, good luck getting them to fix it; you won’t find any help from the city or state. Check your receipt. For general merchandise, you should only be charged 8% in most of the City of Peoria.

My dad knows that, which is why he was surprised when some clothes that my mom bought at Northwoods Mall today were taxed at 9%. He wrote me to ask when the tax rate was raised, and how he could have missed the news. My dad has been reading the Journal Star cover to cover every day for the past fifty years, and he pays particularly close attention to financial information, so it would be very unlikely he missed big news like the sales tax going up a whole percent city-wide. And I have some experience exposing businesses that charge too much sales tax.

I checked the city’s website and confirmed that it was still 8%, broken down as follows:

  • 6.25% State of Illinois
  • 1.50% City of Peoria
  • 0.25% County of Peoria

He called the store and told them that information, and they said “it went up July first in Peoria to 9% from 8 1/4.” Dad said it was never 8 1/4% ever in Peoria, and the salesperson said “it is all done from their corporate offices in Minnesota,” and gave him the phone number for their corporate office. Oh, and by the way, they added, you’ll have to sit through a long automated voice-activated system before you get to talk to a real person. That’s customer service for you. So the local business isn’t taking action to fix the error.

Well, I called up the finance department at the City, and they told me that the tax rate did go up July 1st in Peoria to 9%, but only within the boundaries of the Hospitality Improvement Zone, or HIZ. You may recall that the City imposed a 1% additional sales tax on a small area downtown that includes the Pere Marquette, Holiday Inn City Centre, and Mark Twain Hotel; that money is to go toward building a new Marriott next to the Pere Marquette, so the other hotels get the pleasure of contributing to their competition and put themselves out of business. But I digress.

The City’s finance department went on to say that they’ve gotten several calls about this problem (i.e., businesses outside of the HIZ charging 9% sales tax), and that there appears to be some confusion among the city’s businesses as to what tax rate they are supposed to be charging. The person I talked to said one man called in saying he got charged 9% at a North Peoria gas station, and that the station refunded the overage when he went back to complain after talking to the city. I asked if the city could do anything to correct the problem, and they said all they can do is refer me to the Illinois Department of Revenue, and they didn’t have the number, but I could get it by calling information. So the City isn’t taking action to fix the error.

I called the Illinois Department of Revenue and they verified that the correct tax rate is 8% outside of the HIZ. It’s even on their website at http://tax.illinois.gov/ — you just click on the Tax Rate Finder link on the menu to the left and follow the prompts. The HIZ rate of 9% is listed first, which may be part of the confusion, but it also provides a list of the individual business addresses that are affected by the HIZ tax (there are only about 46 of them), and the next rate says “OUTSIDE ABOVE DISTRICT(S)” and lists the 8% rate.

I asked the representative what could be done about businesses overcharging, and she said that the correct rate is preprinted on the tax remittance form the businesses send to the state. She said the business can call Central Registration at 217-785-3707 with their Illinois Business Tax (IBT) number and verify the correct rate. But she said it probably wouldn’t do any good to report them to the “cheat line” (1-800-243-2811). As far as the state is concerned, as long as the business is remitting the total amount of tax they collect, they’re okay. It’s only tax fraud if they collect, say, 9%, but only remit 8%. As long as they remit the whole 9%, the state doesn’t care and is happy to keep the money. So the state isn’t taking action to fix the error.

Apparently no one is looking out for consumers in this town. Businesses can charge any additional tax amount they want and the city and state don’t give a rip. It’s up to you, the citizen, to take matters into your own hands and convince the businesses and/or their parent corporations that they’re overcharging us. There’s no penalty, no law against overtaxing. You have to take action to fix these business errors, and good luck doing it.

Peoria County, Taxes

Unhappy taxpayers should follow appeals process

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The Peoria Times-Observer is reporting that a bunch of North Peoria residents are “upset with the practices of the Peoria County Board of Review” and may file a lawsuit. Among those upset are realtors Michael Maloof and Brian Monge and county board member Bob Baietto.

One member of the group, who requested to be anonymous, said it appears the only way to affect change is a lawsuit.

“What it comes down to is politics,” he said. “I was incredibly naive. I thought we could win this by going through channels and giving them proof. I was wrong. We need to make noise. We need to find more people who are mad.”

The remaining members of the group agreed. A consensus was reached that efforts now need to concentrate on finding an attorney who can advise the group on what grounds they can use to sue.

Of course, the politics runs both ways. Some members of the county board attempted to resolve the situation by removing two Board of Review members: Gary Shadid and Nancy Horton. Having failed in that attempt, they’re now looking at a possible lawsuit.

But here’s my question: Have they indeed gone through all the channels, as was implied? Or have they only gone as far as the local Board of Review? According to a state publication called “The Illinois Property Tax System,” there are a couple of ways to appeal the decision of the local Board of Review:

  • The decision may be appealed (in writing) to the Property Tax Appeal Board, a five-member board appointed by the governor. The Property Tax Appeal Board will determine the correct assessment based on equity and the weight of the evidence. Taxes must be paid pending the outcome of the appeal.
  • The taxes can be paid under protest and the county board of review’s decision can be appealed directly to the circuit court by filing a tax objection complaint. Taxes and levies are presumed to be correct and legal, but this presumption can be rebutted. The taxpayer must provide clear and convincing evidence.

If the Board of Review’s actions are so unfair, then it should be a cinch to get them overturned on appeal. A large number of successful appeals could then be used as evidence of the local Board of Review’s alleged poor decisions and presented to the full County Board for appropriate action. On the other hand, if the decisions are upheld on appeal, then the local Board of Review will be exonerated.

Bottom line, the complainants should follow the appeals process, not resort to political and/or legal strong-arm tactics to force the Board of Review to render decisions in their favor.

Nation/World, Taxes

Obama speaks out against tax cheats

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Since I posted the video of Schock’s reaction to Obama’s new tax policy, I thought it might be sporting to post the President’s announcement of his tax policy to kind of put things in perspective. Here’s what I found on the White House’s website:

What immediately made me laugh — not so much in amusement, but rather in disgust — was the fact that Tim “Tax Cheat” Geithner was introducing the whole thing. How can that guy stand up there and talk about tax cheats and not immediately get struck by lightning? Then Obama says this:

Nobody likes paying taxes, particularly in times of economic stress. But most Americans meet their responsibilities because they understand that it’s an obligation of citizenship, necessary to pay the costs of our common defense and our mutual well-being. And yet, even as most American citizens and businesses meet these responsibilities, there are others who are shirking theirs.

Yes, there certainly are. One of them is standing about five feet to your immediate right, Mr. President! Wow. It just doesn’t get any more hypocritical than that.

My dad, whenever he sees Geithner’s picture in the paper, immediately writes “TAX CHEAT” across Geithner’s forehead. I think that ought to be the standard in all newspapers and news reports across the country. I’m instituting it here at the Chronicle.

timothy_geithner_reuters_tax-cheat

One more thing: I found this funny little parody of “Tax Man” by the Beatles on You Tube. It’s called “Tax Cheat (Tim Geithner Song)”:

City of Peoria, Taxes

City should raise taxes, not cut costs

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The City of Peoria is in a world of hurt. Because of the recession, revenues are down. Way down. In fact, according to a report prepared for Tuesday night’s council meeting, “Staff is anticipating $3,334,129 less revenue than previously forecasted, which would result in a budget deficit of an equal amount.”

As a result, staff is trying to figure out a way to make up the difference. Curiously, they’re trying to do so through fiscally conservative methods, such as contract adjustments, expenditure reductions, revenue-generating activities, and reserve funds. In other words, they’re trying to save money without raising taxes.

But why? If the recent election has shown us anything, it’s that the vast majority of Peoria residents don’t give a hoot whether their taxes are raised. Most of them couldn’t be bothered to drag themselves downtown for early voting, or out to their polling place on a beautiful sun-shiny day. A majority of those that did voted to raise their own taxes for a non-essential project in the middle of an economic recession — some would say depression.

You know what that tells me? That tells me that the city council should stop stressing out about cutting costs and looking for other forms of revenue. In fact, they shouldn’t change a thing about their operating budget. They should simply figure out how much additional revenue they need, and then raise taxes to cover it. Done.

After all, the museum group didn’t look at any other alternatives to downsize their project, or to increase revenue-generating activity, or renegotiate contracts (like using non-union, but prevailing-wage labor), or any number of things that would have made their project more affordable. Yet, the majority of the few registered voters who turned out voted to give them $40 million anyway with no strings attached.

Not just the voters, either. Caterpillar, the Chamber of Commerce, almost all elected officials, District 150, the Peoria Association of Realtors, etc., etc., etc. — they were all for raising taxes. How could any of them complain if the city were to do the same for essential services, such as police, fire, streets, and sidewalks?

I’m calling on all those who supported and voted for the sales tax referendum to write their city council members and demand that they not cut spending, but increase taxes instead. Since we’re all so flush with cash, let’s start using it in the areas that are the most needy.

Museum Block, Peoria Civic Center, Peoria County, Taxes

Ritschel not seeing all the benefits of higher taxes

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Here’s an intriguing story from the Journal Star. It’s in regard to a request from City staff to raise sales taxes downtown to help repay general obligation bonds that will be used to build a new Mariott hotel:

Civic Center officials believe an extra 1 percent sales tax on concessions and catering could put the Downtown sports and recreations center at a competitive disadvantage compared to other nearby facilities . . . .

Ritschel said the 1 percent tax would generate approximately $30,000 a year for the Civic Center, which is less money than they anticipate losing to East Peoria and elsewhere because of the extra tax.

Peoria and East Peoria tax similarly when it comes to hotels, food and beverage sales, Ritschel said, so the extra 1 percent would make the Civic Center “more uncompetitive.”

Perhaps someone from the museum group can explain to Ms. Ritschel and the rest of the Civic Center officials the big benefits of higher sales taxes. They spur economic growth; they don’t hurt it. The new Marriott downtown will bring jobs and be like our own little stimulus package. And besides, it’s so cheap — only $1 for every $100 spent. How much does the average person spend on concessions downtown? $25? It’s only going to add an extra quarter to your purchase! Pocket change, dude. They must just be naysayers who don’t want to see progress in Peoria.

Obviously, I’m poking fun at the arguments given for the museum sales tax. But all sarcasm aside, I actually agree with Ritschel on this issue. The same thing that Ritschel fears will happen with a 1% sales tax increase will also happen if voters approve a .25% sales tax increase in Peoria County to pay for the proposed downtown museum. It will make us less competitive and drive more business across the river and elsewhere. Did you catch the phrase she used? She said a tax increase would make the Civic Center “more uncompetitive.” In other words, there’s already a tax disparity, and adding to it is just going to exacerbate the problem.

Did the Bradley professors take the cross-border effect of tax disparity into account when they did their economic analysis of the museum project? I’ve added that to my list of questions to ask when we meet. I expect a call soon to set up a meeting date/time.

Museum Block, Peoria County, Taxes

County committee approves museum tax referendum

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From the Peoria County website:

The Peoria County Finance/Legislative Committee passed a resolution late this afternoon that would place a referendum on the April ballot asking voters to raise the sales tax rate 1/4 of one percent to help fund public facilities. The County Board must approve the resolution before the referendum can be added to the April ballot. The Board must make its decision by January 30; a special board meeting will be called to allow the full board to vote on the resolution. The date of that meeting has not yet been set.

Should the County Board pass the resolution, the voters will ultimately decide whether to support the sales tax increase. The referendum would include a sunset date, set 20 years from the effective date of the tax increase. If the referendum is on the April ballot and the voters support the sales tax increase, money raised from the increase will be used to help fund construction of the Peoria Riverfront Museum.

Interested persons may click here for more information on the museum funding. From the information library, please select MuseumPolicyConsideration-REPORT.pdf or MuseumPolicyConsideration-REPORTandATTACHMENTS.pdf.

Museum Block, Peoria County, State Legislation, State of Illinois, Taxes

Who’s afraid of the big bad economy? Not the museum!

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From the Journal Star:

With little debate, the Illinois Senate today voted 51-4 to send Gov. Rod Blagojevich a proposal to let Peoria County ask voters to OK a special sales tax to help pay for the Peoria riverfront museum.

The legislation, Senate Bill 1290, passed earlier in the House of Representatives. With Blagojevich’s signature, it would become law, and the question could be put to voters in the February or April municipal elections.

Not mentioned in the article is the fact that the bill allows increases in 1/4% increments, and could be used toward any “public facility” (e.g., Belwood Nursing Home), not just the museum. The way it will likely read on the ballot is:

To pay for public facility purposes, shall Peoria County be authorized to impose an increase on its share of local sales taxes by .25% (.0025) for a period not to exceed (insert number of years)?

This would mean that a consumer would pay an additional 25¢ ($0.25) in sales tax for every $100 of tangible personal property bought at retail. If imposed, the additional tax would cease being collected at the end of (insert number of years), if not terminated earlier by a vote of the county board.”

A quarter of a percent increase doesn’t sound like a whole lot, does it? But consider that, if this referendum were to pass, you would be paying .25% more on things that already are highly taxed — like restaurant food (which would go from 10% to 10.25% in the city). Is that going to make Peoria more or less competitive than East Peoria, right across the river? How many people do you think will come to see the museum in Peoria, then go have lunch in East Peoria?

And what about the economy? Is this the time to be increasing taxes when there’s plenty of unemployed people? What is the city’s solution on how to decrease the unemployment rate?
Consider these other items in the news as of late:

  • “[T]he effects of the economic crisis are being felt beyond Wall Street as charities locally and nationwide report increases in basic needs and decreases in donations to provide those. Some of the people who used to be donors are now asking for donations…. Nearly 90 percent of Catholic Charities nationwide report more families seeking help, with senior citizens, the middle class and the working poor among those hit hardest by the downturn…. The Salvation Army already has seen between 15 percent and 20 percent more need than last year in its first week of assistance applications received for the holidays…. The Friendship House scaled back the number of families this year allowed into their Adopt-A-Family program to ensure they could fulfill the need.”
  • “Fiscal restraint was the guiding principle in crafting next year’s [Peoria] county budget, which represents a 6 percent overall decrease over last year’s budget. In what is being described as a ‘maintenance budget’ with no new taxes or fees and no spending cuts, preliminary figures show spending requests at nearly $122 million while the county expects to bring in about $119 million in revenues. The approximately $3 million deficit – mostly in the capital fund – will be covered by reserve funds that sit at nearly $74 million, said Erik Bush, Peoria County’s chief financial officer….. The county expects to collect $25.5 million from taxpayers, about $1 million more than what was collected in 2007. Although the tax rate will drop 1 cent to 81 cents per $100 assessed valuation, property values are projected to increase 5.4 percent, so homeowners actually will pay more taxes to the county. The owner of a $120,000 home, whose value increases the projected 5.4 percent will pay $341.50 in taxes to the county, or $13.50 more than last year.”
  • “In total, the city’s staff whittled a $2.2 million budget deficit down to $117,771, an amount that some council members praised. ‘We asked an unbelievable task of our staff,’ Mayor Jim Ardis said. ‘Without cutting any positions or having any tax increase.’ …Finance Director Jim Scroggins said the biggest savings comes from the city’s health care costs, reflected in a substantial difference between the 12 percent budgeted increase for 2008 and the actual increase in health-related costs of only 4 percent…. In addition, the city plans to scale back on parking deck repairs ($300,000), repairs to some of its buildings ($200,000), delay repairs to police headquarters ($25,000), and reduce the neighborhood signs program ($68,662).”
  • “Illinois’ backlog of unpaid bills has hit a record $4 billion, and Comptroller Dan Hynes said Thursday the situation is ‘potentially catastrophic’ if allowed to continue…. Earlier this week, Blagojevich’s office said state revenues will fall $800 million short of projections because of the recession. The Senate Democrats’ top budget person, Sen. Donne Trotter of Chicago, said borrowing money right now may not be a good idea because of interest costs. He said the state should tap into its ‘rainy day’ fund first. Hynes said money in the rainy day fund was used in July. Trotter’s Republican counterpart, Sen. Christine Radogno of Lemont, also didn’t think much of borrowing money. ‘That’s exactly what’s gotten us into this problem,’ Radogno said. ‘Continuing borrowing is not a good idea. They’re going to have to look at making cuts. The wiggle room is gone.'”

It’s time to use all that advertising money to come up with another plan — one that doesn’t involve raising taxes.


Museum Block, before it was turned into a temporary parking lot
City of Peoria, Taxes

Are downtown properties underassessed?

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While I was looking at some property information on Main Street, I noticed a disparity between the assessed value of the property and what actual sales have been. Here are the properties adjacent to the Pere Marquette on Main:

Property ID Address Assessed Value 2007 Taxes
1809206011 533 Main $14,280.00 $1,174.82
1809206012 531 Main $178,700.00 $14,701.58
1809206013 527-529 Main $87,580.00 $7,205.18
1809206014 519 Main $58,780.00 $4,835.82
TOTAL $339,340.00 $27,917.40

That gives those properties, according to the tax assessor, a fair market value of $1,018,020 (i.e., three times the assessed value). However, also according to the assessor, these four properties were sold for $1.05 million in 1997, and $1.5 million in 2004. So the current assessed value is lower than the properties were worth over 10 years ago, and a half-million dollars lower than they were worth four years ago. Underassessment means lost revenue to the city as well as the county.

Are we talking about a lot of money in lost tax receipts here? Maybe not one year from just these four properties (although every little bit helps when the city is looking at a $2.2 million deficit). But over time, it adds up.

And what if this isn’t an anomaly? What if other downtown properties are underassessed? I think it’s worth investigating, especially with the city in need of extra money and contemplating raising taxes and fees. Why shouldn’t downtown property holders pay their fair share?

City of Peoria, Taxes

Coming soon: Higher taxes

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Even without the $100+ million combined sewer overflow (CSO) project figured in, Mayor Ardis says the city is looking at a budget deficit of $2.5-3 million. That money is going to have to come from somewhere. “Common sense would dictate there won’t just be a new discussion about a new revenue stream, there is going to have to be one,” Ardis told the Journal Star.

On WCBU news this morning, Mayor Ardis stated, “The last thing the council will consider is a real estate or tax increase.” In other words, they will look for ways to save money or find other revenue streams, and will consider a tax increase a last resort. (Nevertheless, Ardis supports the proposed downtown museum which can only be completed if a tax increase is implemented county-wide.)

So let’s talk taxes. The city’s portion of your property tax bill is actually quite low, only about 9-10¢ of each property tax dollar. It’s been kept that way because the city over the years has relied more and more heavily on sales taxes and additional fees like the so-called garbage fee.

The argument for this trend is that sales taxes are spread among everyone who shops in Peoria, not just property owners. That would include people from the surrounding cities and towns who come into Peoria to shop at the malls or eat dinner or see a movie. Harder to defend is the garbage fee — a flat, regressive tax applied to everyone who gets a water bill. Property tax increases are also considered a last resort because, although the city’s portion is small, property taxes overall are high, and the city wants to attract homeowners.

Perhaps this would be a good time for the council to start looking at root causes. Why are expenses so high and why are revenues not keeping up with expenses?

Could it be our penchant for annexing more and more land and building out more and more infrastructure for those “growth areas” in a city that hasn’t seen population growth in decades? Annexation is consistently presented as the path to financial solvency, but despite nearly a half-century of annexation that has seen the city more than double in size, our taxes are higher, population growth is stagnant, older parts of the city are hollowed out, and revenues are insufficient. Methinks this strategy is not working.

Museum Block, Peoria County, Peoria Public Schools, Public Building Commission, State Legislation, Taxes

Higher taxes on the way

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A couple of bills are wending their way through the State legislature and are sure to find their way into your pocketbook soon:

  • SB 2071 — School Construction Bonds. Sponsored by Senators Koehler and Risinger, this little bill gives District 150 even more borrowing power by letting the district exceed debt limitations if they use the Public Building Commission (PBC) for matching construction funds. The Journal Star reported on this on March 13: “Part of the intention…, said District 150 Treasurer Guy Cahill, was to use the PBC money as matching funds if the state ever re-authorizes a school construction program.” So if this passes and the state gives them school construction money in the future, evidently the school board would be able to match that grant with PBC funds, which are paid back by taxpayers — with interest. Remember that PBC funds are accessible without a referendum; there’s no accountability to the voters, other than voting out the school board members (a process that takes a number of years, and would only be effectuated after the money is borrowed and spent).

  • SB 2077 — County Code Retailers’ Occupation Tax for Public Facilities. This is also sponsored by Senators Koehler and Risinger, and it just passed the Senate 47-4 yesterday (April 1). It now goes to the House. WMBD-TV had this story: “A bill allowing Peoria County voters to decide whether they want to pay a special sales tax for the proposed riverfront museum passed the Illinois Senate Tuesday…. County officials say it would provide another source of funding for the proposed multi million dollar facility, although the size of the proposed tax hasn’t been determined.”

    The good news is that this tax is subject to referendum. They can only impose this tax if the voters approve it. And, just to sweeten the deal, the county could put a sunset provision on the tax, meaning it would expire on a certain date and a new referendum would have to be approved to reinstate/extend it.

    But here’s the thing — the museum is only one of the many possible uses for this tax. It could also be used for other public facilities, like nursing homes. This opens up many possibilities. They could try to sell a tax referendum that wouldn’t just be for the museum (which has little support), but also for other public facilities that need funding help (which have higher support). That could set up a quandary for voters, and could sway the outcome. Even if that scenario doesn’t happen, the county will now have a new potential revenue source, and they’ll likely find a way to coerce voters into approving it, with or without museum funding (e.g., “if you don’t approve this public facility tax, you will be throwing Bel-Wood residents out onto the street — have you no conscience?!”).