Urbana to see $343,000 in increased tax revenue in Fiscal Year 2013

Urbana’s quarter-cent sales tax increase will go into effect Jan. 1, 2014, and the city will see an estimated tax revenue increase of $686,000. The city of Urbana will only see $343,000 in Fiscal Year 2013 because January falls midway through the fiscal year.

This leaves an additional $660,000 in expenditures to be covered, according to an Aug. 22 city council memorandum from Urbana Mayor Laurel Prussing.

Urbana City Council approved the sales tax increase 6-1 on Sept. 14, following Champaign’s quarter-cent increase in June.

Beginning Jan. 1, Urbana’s sales tax will reach 9 percent — higher than Springfield’s current 8 percent and just shy of Chicago’s 9.25 percent sales tax rates.

Eric Jakobsson, Ward 2, said he voted to increase the sales tax “because the choice was (between) increasing (sales) tax, or increasing other taxes, or cutting services.”

“It would be a very hard choice between cutting (social services) or cutting personnel,” Jakobsson said. “I hope we don’t have to do it, but we’ll see. We may have hard choices to make in the next year.”

Michael Madigan, Ward 6, was the only council member to vote “no” on the new sales tax.

“We can’t just command more money from our citizens,” Madigan said.

He said he would also be opposed to layoffs and additional tax increases to make up the remaining deficit, but he thinks the city needs to look into reducing spending in other areas.

He suggested that the city council look into police and fire department overtime, social service contributions and perhaps offer 32-hour work weeks to city employees as a means to fill in the deficit.

“For a lot of folks who are less fortunate, this is a regressive tax on them,” Madigan said. “The less you make, the more the sales tax takes of your paycheck.”

Diane Marlin, Ward 7, who voted in support of the sales tax increase, said the increase is aimed to provide the city increased revenue on goods that are not necessities.

“(The tax increase) excludes some of the necessities such as medical supplies, prescription meds, non-prescription meds, groceries and that sort of thing,” Marlin said.

The sales tax increase also excludes items that need to be registered with the state, such as vehicles.

Urbana resident Margaret Miller said she had mixed feelings about the sales tax increase.

She didn’t want to see budget cuts affecting the police and fire departments, but she said she was glad the sales tax wouldn’t raise grocery or medicine costs for consumers.

Eli can be reached at [email protected]