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State use-tax reclassification and shrinking PPRT cut into Lee County revenue, staff warn
Summary
Finance staff explained that state reclassification of use tax receipts and a steady decline in Personal Property Replacement Tax (PPRT) have reduced expected county revenue and created forecasting challenges.
LEE COUNTY, Ill. — Lee County officials told the Finance Committee that state-level changes to how use tax and business replacement taxes are collected and distributed have reduced the county’s expected receipts and made forecasting more difficult.
Jeremy (staff member) explained that recent state adjustments have reclassified some collections previously pooled as “use tax” and redirected the true sales tax receipts to ZIP codes where large retailers have nexus. "So that's getting slowly weaned away from us," Jeremy said, describing how reclassification shifts money away from less-populated counties.
Staff gave specific high-level figures for PPRT, showing roughly $1.6 million in 2022, about $1.04 million in 2023, roughly $800,000 in 2024 and an estimated run rate near $500,000 for 2025. Jeremy said the county’s contact at the state could not provide a full future schedule and that staff expect further clarification in August. He warned the PPRT decline has been consistent — "for the last 2 and a half, 3 years, it's gone down consistently about 30% a year," he said.
Committee members also discussed how the state’s decision to fund certain salaries — including the sheriff’s salary — by taking amounts out of the PPRT pool has reduced the county’s distributable share. Jeremy noted legislation under discussion could shift more constitutional-office salaries to state funding, which would further compress the PPRT pool available for distribution to counties.
Regarding use tax, Jeremy and other staff described that historical use-tax pooling was apportioned by population to counties but that new rules allocate tax where purchases are shipped, favoring larger urban ZIP codes and retailers with local nexus. That change, staff said, reduces the county’s share of what had been a pooled statewide distribution.
Staff recommended conservative revenue assumptions for both use tax and PPRT until the state issues updated calculations and said they would monitor state guidance and report back to the committee.
