A proposed sales tax increase in Streator has stalled.
The discussion arose again during a city council meeting as the council looked at ways to meet its pension obligations.
Council members seemed less enthused about the idea after hearing from the public during the meeting.
Jodi Ogle, Streator START chairwoman, spoke on behalf of Streator’s downtown businesses and said that while the owners realize pensions are a problem, the sales tax would come at the expense of small business owners.
“The increase would be economic suicide," Ogle said. “We can’t afford to lose any competitive edge we currently have.”
Councilman Joe Scarbeary proposed a half-cent sales tax increase in November that would bring the aggregate sales tax levy to 8 percent.
Half the proceeds, around $500,000 would be directed toward the city’s public safety pensions while the other half would go toward a reduction of the property tax levy.
The state requires 90 percent funding of all pension funds by 2040 with Scarbeary stating the city is “nowhere near that.”
Ogle worried the increase would cause a loss of business to other towns, which would effectively stop the growth and momentum the city has recently picked up with regards to its small businesses.
“This will kill us. This will kill our town,” Ogle said. “There are other ways.”
Steve Broadus, another Streator START participant and businessman, also spoke in opposition to the increase noting the city had only recently seen a small uptick in sales tax receipts after dipping in 2013. He also found it “concerning” the sales tax plan originally came from Scarbeary and noted a potential conflict of interest stating Scarbeary is an active member of the Streator Fire Department.
Scarbeary said he never wanted to hurt small businesses with the plan but was only researching every possible solution to funding the pensions.
“I understand I have something to gain, but I have an obligation not only as the president of the pension fire fund but as a city council member to address this problem,” Scarbeary said. “It’s not just our problem. It’s in every city.”
Councilmen Ed Brozak and Brian Crouch also expressed their concerns.
“I’d like to give our new businesses a chance and some of the other businesses that are still coming to town a chance,” Brozak said. “If we raise the sales tax I think we’ll put ourselves in a position we’ll lose any advantage we have right now to other communities."
A public referendum would be required in either March or November to pass.
Meeting mandate requirements with no funding
Mayor Jimmie Lansford said he didn’t want to touch the sales tax as it is, but noted raising taxes may be the only option if the city can’t meet its deadline and lamented mandate requirements with no funding.
Republican Rep. Jerry Long, of Streator, attended a portion of the meeting and said he was there to “learn and observe.”
He noted he sponsored a bill that tried to eliminate unfunded mandates he said are a burden on school districts and municipalities.
Scarbeary reiterated it was not his intent to harm businesses with the increase and is open to other non-tax revenue sources if they can be identified.
No other ideas were presented by the city council.
Brozak said the council has some more time to consider other options.
“No and I agree,” Scarbeary added. “But time is money.”