New sales tax in DeKalb County for public schools?

Officials at school districts in DeKalb County are considering asking voters if they would be supportive of an up-to 1% sales tax they said could create $10M in revenue for all school districts in the county, while taxing local purchases.

During a June school board meeting, Sycamore Community School District 427 Superintendent Steve Wilder said he’d recently attended multiple meetings on the proposal of a potential new tax on DeKalb County residents. No vote has been set or decision made on the matter, however.

Wilder said during those meetings that representatives from limited liability company PMA Securities presented him with information about implementing a county-wide sales tax that could generate more than $10 million in revenue for the 19 school districts in DeKalb County.

Wilder said he’s in favor of a proposed new sales tax, dubbed the DeKalb County Area School Districts County School Facility Occupation Tax.

“My recommendation is based on the fact that projected revenue would allow us to continue to complete preventative maintenance and be a little bit proactive in addressing facility needs without putting that on the property tax,” Wilder said.

Vice President and senior analyst at PMA Securities Jennifer Currier told the Sycamore school board June 25 that the sales tax could be imposed in 0.25% increments, up to 1%, on everything municipal and county sales taxes apply to except cars, trucks, boats, mobile homes, farm equipment and various services.

“What it does apply to is basically any items that you’d find at a department store,” Currier said.

The sales tax would have generated $2.5 million in additional revenue for Sycamore schools in 2023, according to a district document that cites a PMA estimate based on Illinois Department of Revenue data.

Each school district with students residing in DeKalb County would receive revenue from the tax weighted proportionally to the respective district’s share of DeKalb County students, according to the outline.

Those calculations also estimate that Genoa-Kingston Community Unit School District 424 would have generated an estimated $1 million from the tax, had it been implemented in 2023. Genoa school district teaches an estimated 10% (1,544) of the enrolled students in DeKalb County.

The tax revenue would be collected by the Illinois Department of Revenue and disbursed on a monthly basis by the state treasurer to the Regional Office of Education, which would be responsible for allocating the collections to school districts. Regional Superintendent Amanda Christensen did not reply to request for comment for this story.

What would new tax fund?

Funds generated from the sales tax could be used for school facility purposes, officials said.

Those purposes might include: buying new school buildings, or funding building renovations; land acquisitions; and building demolitions, according to Sycamore district documents. Improvements to technology infrastructure, parking lots, roofs and other aspects of school facilities could also come through the sales tax revenue.

Debt service on new debt issued for eligible school facility purposes, pay-as-you-go capital projects for school facility purposes and the retirement or abatement of bonds and interest tax levies, as well as paying of bonds previously issued for school facility purposes are all also qualified uses of the sales tax revenue, according to the Sycamore district document.

Buses, textbooks, some operating expenses, computers, moveable equipment and detached furniture and fixtures cannot be purchased with sales tax revenue, however.

According to Sycamore school district calculations, DeKalb the potential of a referendum on the November ballot, asking voters if they would support a new tax.

schools have the potential to generate the most tax revenue, an estimated $4.8 million, than any other district under a proposed tax. Those numbers estimated tax revenue if the tax had been implemented in DeKalb in 2023, documents show.

Referendum for voters? Multiple districts have to approve it

DeKalb board member Amanda Harness said recently she would not be supportive of a referendum. The DeKalb District 428 school board at its July 16 meeting discussed “Why would we entertain this when we have a very healthy fund balance?” Harness said. “To me, going through this presentation I see they need our support. The county needs our support because we’re almost at 50%.”

In order to place a sales tax referendum on the November ballot, school districts representing at least 50% of grade-school ahed students in DeKalb County have to authorize the referendum.

DeKalb School District has 45.9% of the county’s student population enrolled in its schools. Sycamore has 23.8%, according to Sycamore school district documents. Neither district can do it alone.

Currier told Sycamore officials she believes they’ll need support from the DeKalb School District 428 board to get a referendum on the ballot in November.

“You pretty much have to have District 428 on board because they do carry nearly half the total students in DeKalb County, so their involvement is all but required to make this question get on the ballot,” Currier said in June.

Together, the DeKalb and Sycamore school districts can authorize the referendum without needing assistance from other school districts in the county. Without DeKalb’s help, Sycamore would need almost every other district with students living in the county to authorized the referendum, however.

Sales tax rates in DeKalb County municipalities are between 6.25% and 8%, according to Illinois tax records.

While DeKalb and Sycamore school board members have discussed the idea, neither board has held a vote on the matter.

During the July 16 meeting, DeKalb board member Fred Davis questioned why school districts would pursue a new tax on residents’ purchases.

“Would it help them in a way where we wouldn’t have to when the tax levy subject comes around and it gets pretty hairy, would it help that situation?” Davis asked.

Armir Doka, the district’s business and finance director, said he believes a new tax would aid district finances.

“This new stream of revenue kind of avoids us to keep increasing or replacing the needs to go for a tax levy increase,” Doka said.

Davis, acknowledging the benefits of the sales tax, said he can see both sides of the argument.

“I think that’s the goal,” Davis said. “Nobody wants to hurt the taxpayer. I like the idea if we’ve got 50% of the people help paying this if they’re coming in from out of town. Because you know at Northern [Illinois University], they have tons at activities out there at the Convo Center and what-not. I mean, it’s a lot of money generated by out of town people. We got what you say approximately 42% in town. You’re paying it one way, but are we saving another way? Is it a wash, or no? Where’s the gain?”

DeKalb School District 428 Superintendent Minerva Garcia-Sanchez said she plans to share details on how the July 16 board discussion went with DeKalb County Regional Office of Education’s Superintendent Amanda Christensen. Garcia-Sanchez said Christensen is working with school superintendents from across the county to gauge whether there is an opportunity to pursue a referendum.

“Anything that comes out from our board, I will share back with them to say here are the questions, here are the nuances of what we’re saying, what are we going to do,” Garcia-Sanchez said. “Then, together we’ll make that decision and bring it back.”

If school boards representing more than 50% of students in DeKalb County authorize the referendum on or before Aug. 19, the Regional Office of Education will need to certify the question with DeKalb County Clerk Tasha Sims no later than Aug. 28 for the referendum to be put on the Nov. 5 election ballot.

On July 10, Wilder said other DeKalb County school districts have begun considering the tax proposal, but none have begun communicating to the public what it would mean for the districts, and area consumers.

Sycamore school board member Alex Grados said he wants to hear more from his constituents on the matter.

“It’s just my thinking that it might be valuable to get a pulse on the community ... just to see what they think,” said Grados, expressing his desire for the public to be aware of the sales tax discussion the board is having.

Sycamore school board member Eric Jones said he doesn’t think the public needs to be informed of the ins-and-outs of the proposed referendum until it’s officially on the ballot, however.

“I don’t personally see the benefit of that,” Jones said. “They’re going to get their vote. I mean, we’re not voting on passing it [the sales tax]. We’re voting on putting it on the ballot for them to decide so their vote will be in November. So I think it’s probably just a lot of extra work, and you’re probably not going to get the return on opinion that you’re hoping for in a few week’s time.”

Sycamore school board member Michael DeVito said he thinks elected officials should make their decision based on how they think the tax proposal would impact their respective district.

“It shouldn’t matter what other districts do, I don’t think. It shouldn’t affect what we decide,” DeVito said. “I think even if DeKalb said no, it would still be wise for us to host a vote and then vote in good faith of the people and students of Sycamore.”

In DeKalb, Harness said she doesn’t think the implementation of the sales tax would inherently deter area units of government from raising taxes.

“If this moves forward and for some reason passes, which would be surprising, but this doesn’t stop cities from changing their sales tax, too,” Harness said. “The city of DeKalb could all of a sudden say they want to do an increase. ... It doesn’t stop anyone else from asking for more.”