Mattoon CUSD#2 Presentation Illinois County School Facility Tax Public Act

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1 Mattoon CUSD#2 Presentation Illinois County School Facility Tax Public Act Larry D. Lilly, Superintendent Mattoon CUSD#2

2 Landmark Legislation for Illinois Sales tax vs. Property tax for School Capital A tax on the sales of retail goods paid by consumers vs. a real property tax paid by property owners Originated in Iowa in 1998 Adopted by all counties in Iowa Passed by the Illinois General Assembly on May 30, 2007 Recently approved by Champaign County in April

3 Illinois County School Facility Tax Act: County where the CSFT has passed 3

4 Low Impact on Key Business and Fixed Income Persons Sales Tax Base: Everything in the municipal and county retail sales tax base is included in the tax base except for: Cars, Trucks, ATVs Boats & RVs Mobile homes Qualifying Food Drugs Farm Equipment and Parts Farm Inputs If it is not currently taxed, it will not be taxed 4

5 Area Sales Tax Rates 5 City Charleston Mattoon Oakland Champaign Urbana Effingham Decatur Terre Haute Coles County Champaign County Effingham County Sales Tax Rates 6.75% 6.75% (7.75% in S. Rt. 45 & Broadway East Business District) 6.25% 8.75% 8.75% 6.50% (7.50% in Ford Ave. Business District) 8.00% 7.00% (Additional taxes on food, hotel, and gas) 6.25% 7.50% 6.50%

6 Use of Sales Tax Revenues Eligible Capital Projects Demolition New Facilities Additions & Renovations Land Acquisition Ongoing Maintenance Architectural Planning Durable Equipment (non-moveable items) Fire Prevention and Life Safety Disabled Access & Security Financing Costs Parking Lots Abatement of Property Taxes Levied to Pay Bonds Issued for Capital Purposes Ineligible Uses Buses Detached Furniture & Fixtures Computers Moveable Equipment Operating Costs Salaries and Overhead 6

7 County School Facility Tax (CSFT) Worksheet for Coles County - Abatement Impact Per District A B C D E F G H District Enrollment from Fall Housing Report (1) Percent of Total Adjusted Annual CSFT per district (2) Adjusted Annual CSFT per pupil 2007 District EAV (3) Potential Property Tax Reduction (Abatement) (4) Effect of Tax Reduction on $100,000 Home Charleston 2, % $1.921,986 $721 $265,362,473 $0.52 $ Mattoon 3, % $2,383,725 $721 $271,994,612 $0.52 $ Oakland % $148,189 $721 $26,245,290 $0.41 $ Total % $4,453,900 $563,602,375 (1) K-12 Enrollment from ISBE Fall Housing Report (2) Based on 1% sales tax derived from Illinois Department of Revenue CST data, also excludes registered vehicles, 2008 figure estimated with actual Q1, Q2, Q3, and Q4 of 2007 (3) As reported by ISBE Annual Financial Reports and County 7 (4) 2009 property tax rates: Charleston 4.70; Mattoon 4.53; and Oakland 5.06 For additional information please contact Tom Crabtree at ext at Stifel Nicolaus

8 Property Tax Relief If approved, Mattoon CUSD#2 would receive approximately $2.3 million in annual sales tax revenue. The current elementary bond payment is approximately $1.5 million annually. District levies approximately.52 cents in property taxes to make the bond payment. Mattoon Board of Education would reduce district total tax levy by.52 cents for the 2010 levy for taxes payable in District would make the annual elementary bond payment with sales tax revenue. Mattoon taxpayer owning a $100,000 home would save $ per year. 8

9 Mattoon CUSD#2 Debt Schedule 9 Year Elem. Bonds MHS Debt Cert. Total $1,456,643 $0 $1,456, $1,304,985 $0 $1,304, $1,331,698 $0 $1,331, $1,356,273 $368,989 $1,725, $1,383,710 $366,975 $1,750, $1,409,759 $368,730 $1,778, $1,438,499 $365,480 $1,803, $1,468,604 $363,223 $1,831, $1,494,854 $365,618 $1,860, $1,524,794 $362,281 $1,887, $1,556,794 $363,369 $1,920, $1,584,794 $363,846 $1,948, $1,618,794 $363,694 $1,982, $1,648,294 $362,891 $2,011, $1,686,944 $361,419 $2,048, $1,716,344 $364,160 $2,080, $1,755,869 $361,093 $2,116, $1,791,963 $362,189 $2,154, $943,463 $0 $943,463 TOTALS $28,473,078 $3,993,783 $33,937,035 Remainder To Date $17,322,907 $2,160,386 $20,953,467

10 3-Point Plan for 1% Sales Tax Revenue (Mattoon CUSD#2) 1. Reduce district property tax levy by approximately.52 cents. Approximately $1.5 million annually 2. Pay debt certificates for MHS renovation. Approximately $400,000 annually 3. Maintain existing district facilities. Approximately $400,000 annually 10

11 Savings Comparison of Sales Tax for Property Tax Swap The owner of a $100,000 home, living in the Mattoon school district, would save $ in property taxes. That same $100,000 homeowner would have to buy over $17,293 of goods (exceptions below), in one year, taxed at 1% to lose the benefit of the property tax savings. 11 Exceptions to the 1% County Sales Tax: Cars, Trucks, ATVs Boats & RVs Mobile homes Most Groceries Drugs Farm Equipment and Parts Farm Inputs

12 How to Place Before Voters? Two Ways: County Board may pass a resolution School districts may pass a resolution When School Boards representing at least 51% of the resident student enrollment in the county adopt resolutions, the County board must certify the question to the County clerk. County Clerk will place on the ballot at the next regularly scheduled election. 12

13 Required Language on the Ballot Public Question: Shall Coles County be authorized to impose a retailers occupation tax and a service occupation tax (commonly referred to as a sales tax ) at a rate of one percent to be used exclusively for school facility purposes? 13

14 Passing the Vote and Receipt of Revenues Simple majority of county-wide votes cast needed to pass. County Board may then adopt an ordinance imposing the tax. The ordinance and the election results must: Be certified by the County Clerk Filed with the Illinois Department of Revenue 14

15 Timeline is Critical Target Election: February 2, 2010 Election Date Nov Feb 2, 2010 Nov. 2, 2010 Pass Resolution (County Board or School Districts) Nov. 30, 2009 Aug. 30, 2010 Certify the Resolution (County Board) No later than Dec. 3, 2009 No later than Sept. 1, 2010 Election Feb. 2, 2010 Nov. 2, 2010 County Adopt Ordinance and File with IL Dept. of Rev. to Enact Tax No later than April 1, 2010 No later than April 1, 2011 Ability to Sell Bonds Backed by Sales Tax After the County Board has Adopted Ordinance After the County Board has Adopted Ordinance Sales Tax Goes into Effect July 1, 2010 July 1, 2011 Regional Superintendent Funds from the State Approximately 90 Days after July 1, 2010 Approximately 90 Days after July 1, District Receives New Sales Tax Revenues October 2010 October 2011

16 Will the 1% Sales Tax Sunset? What happens when current bonds retire? Options: 1. Sales Tax Remains for Maintenance and/or Expansion The County Board (CB) imposes the sales tax. The CB may leave the tax in effect after bonds are retired. In this option, the school district could use the revenue for ongoing maintenance and expand facilities if needed without increases in property taxes for facilities. 2. Sales Tax Repealed The County Board may repeal all or part of the sales tax in.25% increments from 0 to 1% at any time; however, the CB must continue impose a rate sufficient to pay for bonds supported by the sales tax. 3. Property Tax Levy Decreased The School Board could decrease property taxes levied for the Operations and Maintenance Fund and substitute sales tax revenue to pay for some maintenance costs should the tax remain in effect. 16

17 Outcomes: 1. Eases burden on local property taxpayers Shares school facility costs with others from outside the county, including EIU, LLC, I-57, and county events 2. Supports economic development Reduces property tax burden on businesses considering and locating in Coles County 3. Provides an ongoing revenue stream Pays for maintenance and improvement to facilities 4. Supports quality learning environment for kids. 17

18 Key Resources Anne Noble Senior Vice President Stifel Nicolaus 501 North Broadway St. Louis, MO Phone: ext Larry D. Lilly Superintendent of Schools Mattoon CUSD# Charleston Ave. Mattoon, IL Phone: Tom Sherman Asst. Superintendent for Business Mattoon CUSD# Charleston Ave. Mattoon, IL Phone: Lynda K. Given Kyle Harding Chapman and Cutler 111 West Monroe Street Chicago, IL Phone: 312/ Deanna Sullivan Director of Governmental Relations IASB 2921 Baker Drive Springfield, Illinois Phone: 217/ x1123 Local Tax Allocation Division Illinois Department of Revenue Legal Services Office 101 West Jefferson Springfield, Illinois Phone: 217/ Jane Quinlan Champaign-Ford Counties ROE #9 200 South Fredrick Street Rantoul, IL Phone: Gene Logas Chief Financial Officer Champaign CUSD #4 703 S. New Street Champaign, IL Phone: 217/

19 Thank you for your time! Parts of this presentation contains proprietary information compiled by Stifel Nicolaus. Reproductions may be made with permission from Stifel Nicolaus. Please call for Tom Crabtree for permission at 1(800) , Extension