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Proposed 1% Sales Tax Increase

March 4, 2024 by in CommunityGovernment

1% Sales Tax Increase

On Monday, March 4th the Freeport City Council, will have a first reading on the increase of sales tax to fund city road projects.


WHY does the city of Freeport need to secure a sustainable local funding source for road repairs and improvements?

  • Freeport has approximately 140 miles of road that must be maintained.
  • The “historical” funding source for annual road upkeep has been:
    • City’s share of the State of Illinois Motor Fuel taxes;
    • Federal and State grants;
    • Other city funds as available.
  • Over time, the cost of road upkeep and repairs have significantly increased due to inflation, and extra wear on the existing roads from more frequent extreme weather events.
  • At the same time, traditional funding sources have failed to keep up with these costs (best case) and, in some instances, have been reduced (worst case). For example:
    • Lower gas prices and consumption of gas during COVID;
    • Higher use of electric vehicles decreases the consumption of gas;
    • Gas prices themselves go up and down;
    • All of which impact the amount of motor fuel taxes collected.
  • This has contributed to more underinvestment in our streets, which has made the challenges even harder.
  • As a result, more than 60% of Freeport roads require repair, and 30% require significant repair.
  • Freeport must secure a more sustainable and local funding source for road repairs and improvements.

 

How does the proposed 1% Sales Tax address the problem?

Over the last three years, the city has been able to increase its investment in roads by approximately 200% by leveraging grant funds and other sources. This resulted in approximately 11.5 miles of additional road improvements.

 The proposed 1% sales tax will provide an estimated $3.5 million of additional annual funding, which will increase our investments in roads by approximately another 200%.

The ordinance ensures this money can only be used for the following purposes:

  • Approximately 80% towards:
    • Roadway repairs and reconstruction;
    • Paving materials;
    • Curb and Gutter;
    • ADA-compliant sidewalk ramps;
    • Contracted work related to road improvements.
  • Approximately 20% towards:
    • Utility improvements related to roadway repairs and reconstruction.

Improvements will be made in all wards with advice and input from all Alderpersons.

Transparency, efficiency, and planning are vital to communicating the annual street program for design and construction efforts each season.

This funding outline below will increase or decrease depending on the amount of actual sales tax revenue received annually.

 

WHY is a new Sales Tax a more favorable funding solution?

  1. A general sales tax does not rest solely on the residents of Freeport. Freeport roads are used significantly by people who do not reside in Freeport. As an economic center of activity for  Northwest Illinois, we attract a lot of non-residents traffic, which places additional wear and tear on our roads. A general sales tax allows us to capture a higher percentage of the people who drive on our roads.

 

  1. A general sales tax is more competitive with surrounding communities than a tax solely on gasoline. To raise the same amount of money would require an additional 38 cents per gallon local tax. That would put our local gasoline prices at a significant competitive disadvantage to other communities. A general sales tax, however, would place our total sales tax rates on par with other communities, such as Rockford, Loves Park, Machesney Park, Sterling, etc.

 

  1. A general sales tax also avoids taxing essential items and is more fair to residents with lower and fixed incomes. The sales tax increase will NOT impact the following sales:
    • Food to be consumed off-premise from where it is sold (i.e. Groceries);
    • Prescription and non-prescription medications;
    • Insulin and diabetic-related testing materials, such as urine testing materials, syringes and needles;
    • Medical appliances;
    • Vehicle sales.

 

If advanced at the March 4th City Council Meeting, it will move forward to the March 18th City Council meeting for approval. If approved, the City will begin receiving funds from the increased sales tax in late summer or early fall of 2024 for the kick-off of the 2025 road construction season.

 

To contact your elected officials to discuss your concerns or comments, please visit our webpage for the council members’ contact information regarding the upcoming vote.

 

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