Sales Tax Presentation

County School Facility Occupation Tax Law

2421255

Thursday, December 9, 2010

Allows a county board to submit a ballot question to county voters to implement a sales tax for school facility purposes.

In 0.25% incrementsUp to 1%

Tax imposed on the same general merchandise base as state sales tax, excluding titled or registered tangible personal property (such as vehicles, watercraft, aircraft, trailers, and mobile homes) and qualifying food, drugs and medical supplies.


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School Facility Purposes Acquisition, development, construction, reconstruction,

rehabilitation, improvement, financing, architectural planning, and installation of capital facilities consisting of land, buildings, structures, and durable equipment

Also includes fire prevention, safety, energy conservation, disabled accessibility, school security, and specified repair purposes set forth under Section 17-2.11 of the School Code


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Two ways to get question on ballot (regular elections only):

County Board may pass a resolutionSchool districts may pass resolutions

When school boards representing at least 51% of the student enrollment in the County adopt resolutions, the County Board must certify the question to the proper election authority

Enrollment means the head count of students residing in the County on the last school day of September of each year, which must be reported on the Fall Housing Report


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Form of public question (prescribed in law) Shall The County of _______, Illinois, be authorized to impose a

retailers’ occupation tax and a service occupation tax (commonly referred to as a “sales tax”) at a rate of ___% to be used exclusively for school facility purposes?


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A majority of the votes cast needed to pass

County Board then may adopt an ordinance imposing the tax The ordinance and the election results must be certified by the

county clerk and filed with the Illinois Department of Revenue

If pass in April, 2011, file with IDOR on or before October 1, 2011, tax begins on January 1, 2012


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Tax is collected by Department of Revenue and held by State Treasurer in the School Facility Occupation Tax Fund

By 25th of each month, DOR certifies to State Comptroller the amount to be disbursed to the Regional Superintendents of Schools for the counties where the tax has been imposed and collected during the second preceding calendar month

Within 10 days after receipt of certification from DOR, Comptroller causes ordersto be drawn for amounts contained in the certification

Within 30 days after receipt, ROE disburses sales tax proceeds to school districts


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Distribution of funds

Distributed on enrollment basisOnly students residing in the County are eligible for fundingNeed to determine distribution process with ROE

Districts must deposit the sales tax proceeds in a separate School Facility Occupation Tax Fund which may only be used for school facility purposes


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New School Building Construction No direct referendum required for new school building construction

if building is completed with the expenditure of funds received from the sales tax.


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Alternate Bonds No backdoor referendum

Do not count against debt limit

Revenue stream must be not less than 1.25 times debt service of all alternate bonds payable from such revenue source


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Duration No limit in legislation

County Board may reduce or terminate tax at any time

Exception:

If a school board has issued bonds that are “backed” by proceeds of the tax, then County Board may not reduce or discontinue the tax if doing so would inhibit the ability of a school district to repay the outstanding bonds that are secured by the sales tax

If County Board reduces or discontinues the tax, another referendum must be held to increase or reimpose the tax


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Questions



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This document has been prepared by Chapman and Cutler LLP attorneys for informational purposes only. It is general in nature and based on authorities that are subject to change. It is not intended as legal advice. Accordingly, readers should consult with, and seek the advice of, their own counsel with respect to any individual situation that involves the material contained in this document, the application of such material to their specific circumstances, or any questions relating to their own affairs that may be raised by such material.


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Sales Tax Presentation