Herald-Whig View

Storm clouds loom in Quincy sales tax forecast

Posted: Jan. 6, 2019 12:01 am

THE good news for the city of Quincy is that revenue received through its sales and home rule taxes rose modestly in 2018, a year after a significant decline.

The bad news is that combined revenue of $19.232 million lags behind what was received in 2016, and the increasing popularity of online shopping and the loss of four big-box retailers -- Best Buy, Bergner's, Sears and Kmart -- in the last 13 months clouds future revenue projections.

How 2019 unfolds, beginning with revenue reports for the all-important Christmas shopping season due to be released over the next three months, will be closely monitored.

Considering Quincy's 1 percent share of the state sales tax represents 28 percent of the city's revenue and its 1.5 percent home rule sales tax makes up another 27 percent, any slippage could further hamper the city's ability to deliver services.

The City Council last month narrowly approved a 6.88 percent increase in its property tax levy -- along with spending $600,000 of reserve funds -- to primarily cover fire and police pensions, bond payments and library operations for the fiscal year that begins May 1.

Even with that hike, which was less than the administration sought, city officials may find themselves in a precarious financial situation in the months ahead if the gulf between revenue and expenses further widens.

Some pocketbook issues will be closely watched.

Despite months of talks, aldermen and the administration have yet to agree on the future of curbside trash and recycling collection and yard waste pickup. Some of those services could be eliminated, or larger or new fees passed on to residents to continue them.

Those potentially higher costs would come after the council last May approved raising water fees by 32.2 percent this fiscal year and by 2.5 percent more in each of the following five years to help pay for water and sewer system upgrades.

Even with that increase, the money will cover only a fraction of the infrastructure replacement price of $230 million over the next 20 years.

That came in addition to tacking a public safety fee of $4 per month onto quarterly water/sewer bills to generate $800,000 to help avoid, among other things, terminating eight employees, closing a fire station and eliminating the fix-or-flatten program. That fee ends May 1, 2019.

Clearly, declining or stagnant sales tax revenue isn't the only problem facing municipalities.

Pension costs continue to rise, the state of Illinois has reduced payments to local governments to address its own financial crisis, and employee pay/benefit costs and new equipment prices are rising along with the inflation rate.

Shopping local certainly boosts sales tax revenue, but the closing of large and small retail outlets puts consumers in a Catch-22 situation: The fewer options locally to find the merchandise they want, the more likely they are to shop in other cities or online.

Admittedly, much of the instability of the Quincy retail market can be traced to larger, worldwide corporations failing to adjust to changing consumer tastes. Some of the big-box stores that have closed here were profitable. But the bottom line is they are gone.

How well we support the businesses still here, and those that will come, will determine whether the increased sales tax revenue in 2018 was an encouraging trend or merely a blip on the radar. It's up to us.