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Urbana Approves Sales Tax Hike

On Monday night, the Urbana City Council approved a plan to raise the city's sales tax by a quarter of a percent, bringing it to 9 percent, just below Chicago and in line with Champaign.

Alderman Charlie Smyth said if the city did not do this, then it would have to find other ways to address rising costs

“Unless we are willing to cut people - that’s police, fire, and public works – we don’t have any choice but to come up with the funds to meet payroll, pension, and healthcare cost,” Smyth said.

Urbana Mayor Laurel Prussing has maintained that the higher tax is needed to make up a nearly million-dollar budget shortfall created by Carle Foundation Hospital’s tax exempt status.

Alderwoman Carol Ammons has raised concerns about increasing the sales tax, but she came out in support of it. However she says any effort to raise property taxes would be a step too far.

“When you don’t have money, sometimes you do have to cut some services,” Ammons said. “Sometimes you do have to skill back. Urbana does not like to do that, but we can’t take that off the table and continue to raise taxes over and over again.”

The lone ‘no’ vote on the tax proposal came from Alderman Michael P. Madigan. He said the city should instead find areas in the budget to make cuts.

“It’s almost like Chinese water torcher. I don’t know how to explain it,” Madigan said. “One fee on top of another, one tax on top of another. This year alone, the city council has raised numerous fees because the cost of service keep going up.”

Meanwhile, in an interview with Illinois Public Media a few hours before the vote, Laura Weis, the president and CEO of the Champaign County Chamber of Commerce, urged the city not to raise the sales tax.

“I think the more our municipalities continue to raise tax and fees on the residence and on the business community, the bigger the message that we are sending that we’re not open to business growth,” Weis said.

The increased sales tax takes effect in January. It does not apply to prescription medications and groceries, and big-ticket items, like cars.

Categories: Business, Economics, Government