Editor’s Note: This is the first in a series taking a look at the proposed 1 percent school facility sales tax that will be on the March 18 primary ballot.
While Effingham County voters are getting their first shot at approving a sales tax increase that would — proponents say — help county school districts finance capital improvement and maintenance projects, the concept is far from a new one. In fact, the concept dates back more than a decade.
It was in the late 1990s when the Siouxland Chamber of Commerce — a business advocacy organization covering parts of three states — and the Sioux City School District in Iowa put their collective heads together and came up with a plan to finance school improvement projects without raising property taxes. Barbara Sloniker, the chamber’s executive vice president, said Sioux City school officials didn’t have any way to fund capital improvements for an aging school system within the school district’s bond capacity at that time.
“A group of individuals came up with the idea, then approached the Chamber about lobbying for legislation that would make it legal to increase sales taxes,” she said.
Sloniker noted that it was understood from the beginning that these sales tax receipts could only be used for school building and maintenance projects.
After lobbying from Sioux City-area business leaders, the Iowa state legislature gave the state’s 99 counties the option to pass what became known as LOSST — Local Option Sales and Services Tax — in early 1998. Counties could vote on whether or not to impose a 1 percent sales tax that would be earmarked for school infrastructure.
“The most important thing we did was to limit it (the initiative) to capital expenditures,” said Sloniker.
Sloniker added that the initiative has raised $152.9 million in Woodbury County alone since it was originally passed, enabling Sioux City to build three new middle schools and seven new elementary schools, with another three grade schools under construction.
Woodbury County — which includes Sioux City — was the first Iowa county to pass a LOSST initiative. While more than 61 percent of that county’s voters approved the initiative on an election held Aug. 11, 1998, the concept was a tougher sell in other counties. For example, the first LOSST initiative in Polk County — which includes the city of Des Moines, Iowa’s largest — failed by 43 votes out of more than 66,000 cast on March 16, 1999.
But Polk County voters approved the initiative by a wide margin that November. After all 99 Iowa counties eventually approved the local option initiative — not all did on the first try — the legislature removed that option and passed a statewide 1 percent increase, all of which is earmarked for school infrastructure.
In 2008, the statewide sales tax increase — known as Secure and Advance Vision for Education (SAVE) — was passed and LOSST was retired.
Margaret Buckton of Iowa School Financial Information Services said LOSST originally took hold in Iowa’s more urban counties.
“It was easier to say in the urban centers that somebody else is spending their money to finance your schools,” Buckton said. “Then the rural counties started asking themselves, ‘Why can’t we do this?’”
When Scott County — centered on Davenport, the largest of the Quad Cities — passed its LOSST initiative in 1999, a man named Patrick Verschoore helped with the campaign. At the time, Verschoore was business agent for the plumbers and pipefitters union in the Quad Cities. He later became an Illinois state representative for a district centered around the Illinois side of the Quad Cities and took note of LOSST’s statewide popularity.
“It worked so well in Iowa that it is in every county now,” Verschoore said.
Several years after he was first elected in the General Assembly in 2002, Verschoore sponsored a legislative initiative to give counties the option to impose a sales tax increase for the benefit of school infrastructure. Verschoore’s bill passed the Senate 45-11 on Oct. 10, 2007, and passed the House 79-33 the next day.
The bill originally passed both houses by smaller margins earlier that year, but had been vetoed by then-Gov. Rod Blagojevich. The October votes overrode the veto, however, and voters in individual counties began considering the measure the next year.
Known in Illinois as the school facility sales tax, the initiative hasn’t yet enjoyed the widespread popularity it had in Iowa. While 19 counties have passed the initiative, voters in 34 counties have voted it down, including Fayette County and some more than once, including Shelby County. Only two counties — Champaign and Mercer — have passed the so-called tax swap once it failed the first time. While those in favor of the tax initiative claim it provides a guaranteed funding stream for school projects that, more often than not, leads to lower property taxes, opponents decry the initiative as a tax increase, not a swap.
In Illinois, the tax does not apply to anything that is titled or registered with a state agency, including vehicles; food to be consumed off the premises where it is sold, other than alcoholic beverages, soft drinks and food prepared for immediate consumption; and prescription and nonprescription medicines, as well as various medical supplies, such as medical appliances, insulin, urine testing materials, syringes and needles used by diabetics. Agricultural sales, such as farm equipment, feed, seed, fertilizer, chemicals and livestock reproduction, also are not subject to the tax.
As in Iowa, receipts from the new tax are to only be used for “school facility purposes.”
Individual counties can impose, with the will of voters, anywhere from a one-quarter percent to 1 percent sales tax increase. In Illinois, only Jo Daviess County — with a half percent sales tax — has opted for less than a 1 percent increase.
Once voters have approved the initiative, the county must certify the tax. If that is done before April 1 of a given year, the tax would take effect that July 1. If certified between April 1 and Oct. 1, the tax would become effective the following Jan. 1.
Bill Grimes can be reached at 217-347-7151, ext. 132, at firstname.lastname@example.org, or via Twitter @EDNBGrimes.