PONTIAC — A 1% sales tax for the city of Pontiac, which is estimated to bring more than $2 million a year for local infrastructure projects, was approved by the City Council on Monday.
With the passage of House Bill 3144 at the end of Illinois’ legislative session, municipalities without home rule were allowed to adopt a retailer’s occupation or service occupation tax without the need for a referendum.
Under the statute, this tax revenue may only be used for two purposes.
The first is public infrastructure, which is defined in the statute as municipal roads and streets, access roads, bridges, sidewalks, waste disposal systems, water and sewer line extension, water distribution and purification facilities, storm water drainage and retention facilities and sewage treatment facilities.
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The second is for property tax relief, which is defined by statute as “the action of a municipality to reduce the levy for real estate taxes or avoid an increase in the levy for real estate taxes that would otherwise have been required.”
Pontiac Mayor Bill Alvey said the matter was discussed in depth during a non-voting session of council and it was agreed that the money would help fund additional street and sidewalk projects across the city.
Before voting on the sales tax ordinance, the council adopted a resolution committing the tax revenue to infrastructure projects.
Street renovations are estimated to cost about $50,000 per block for overlay work and about $150,000 per block for curb and gutter rebuilds.
Pontiac City Administrator Jim Woolford said the city had previously considered using the funds for a $7 million bond issuance. Debt service would then be covered by future sales tax receipts.
However, Woolford said there would have been a lot of obstacles in having so much money available for upfront work.
“With the level of work $7 million might bring, we might have a hard time finding contractors to do all the work and we’d have a lot of construction going on at one time,” Woolford said.
The tax would be imposed on general merchandise where the sale originated, foods prepared for on-premises consumption and all candy and soft drinks.
Woolford had said that the city is focused on addressing streets and sidewalks with the sales tax but is not ruling out the use of this money on water and sewer projects in the future.
With its passage, the ordinance will be submitted to the Illinois Department of Revenue prior to Oct. 1. The tax would then go into effect in January 2025.
Distribution is about two months behind collection so the city may not see any new revenue until March 25.
Signs, sights along Constitution Trail
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People walk along Constitution Trail close to Connie Link Amphitheatre in Normal on Thursday.
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Cyclists pass a sign with the Preamble along Constitution Trail on Thursday, next to Rosa Parks Commons.
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Wildflowers surround a copy of the Bill of Rights along Constitution Trail across from Connie Link Amphitheatre in Normal on Thursday.
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A copy of the Preamble to the U.S. Constitution is displayed along Constitution Trail, just south of Raab Road at Rosa Parks Commons in Normal on Friday.
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A cyclist crosses over Linden Street in Normal on Thursday on a bridge that is part of Constitution Trail.
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The Route 66 Bike Route in the Shirley-Funks Grove area crosses Old Route 66 at several well-marked spots.
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A shelter along the Route 66 Bike Route near Shirley offers a pleasant place to picnic.
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Contact Drew Zimmerman at 309-820-3276. Follow Drew on Twitter: @DZimmermanLee