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Effingham council weighs 1% local sales tax to cut city property levy and shore up pensions
Summary
City staff and council discussed adopting a 1% local sales tax (and related grocery and amusement tax changes) that staff estimates could generate about $6.53 million annually; council scheduled a formal vote in two weeks after public input.
City of Effingham leaders spent the bulk of their meeting discussing whether to adopt a local 1% sales tax, allow a 1% grocery tax and repeal the city's amusement tax as a package to fund pension obligations and provide property-tax relief.
City Administrator Miller told the council the local 1% sales tax would need an ordinance submitted to the state by Oct. 1 for a Jan. 1 implementation. "We got these numbers from the Department of Revenue. It would generate $6,532,260," Miller said, citing last year's receipts as the basis for the estimate. Miller added the state's recent changes allow non-home-rule cities like Effingham to opt into the sales and grocery taxes locally.
Staff laid out how the revenue could be allocated: $1 million to the police pension, $1 million to the fire pension, and the rest used to eliminate much of the city's $4.3 million tax levy and to fund infrastructure and reserves. Miller said police, fire and IMRF pension contributions are each near $1 million now and noted state law will require stronger funding in future years.
Council members asked about timing, effects on residents and growth assumptions. One council member cautioned that sales tax receipts can fluctuate and noted receipts lag about three months after collections, meaning the city likely would not see revenue until spring after a January start. Another emphasized that eliminating the grocery tax locally would spare grocery shoppers that additional tax while freeing up some tourism-related revenue if the amusement tax is repealed.
Public commenter Mark Meggett urged passage of the 1% but emphasized planning for school needs and spending priorities: "Don't forget the schools," Meggett said, urging the council to consider school facilities when allocating new revenue.
Where the money goes remains a council decision. The mayor proposed a formal vote in two weeks so staff can gather community input and firms can finalize levies; council members agreed to return the measures for a decision at the next meeting. The council did not adopt any ordinance tonight; it scheduled a vote after additional community outreach and staff follow-up.
