Legal Trickery to Enable Counties with a New Layer of Taxation for Illinois Residents?

Future of cigarette tax uncertain
By Dan Petrella, dpetrella@libertysuburban.com
GateHouse News Service
Oct 09, 2007
DuPage County, IL - The deadline for DuPage County Board Chairman Robert Schillerstrom to propose his 2008 budget is coming next week, and the fate of the cigarette tax the county hopes will close its anticipated budget gap is still unclear.
Officials have predicted there will be an estimated $20 million shortfall in next year’s budget unless the county finds a new source of revenue. Over the past several months, the county has pinned its hopes on a new $1-per-pack cigarette tax being debated in Springfield.
The bill has already passed both houses of the Illinois General Assembly, but differences between the House and Senate versions of the bill must be rectified. The deadline for final action on the bill was originally scheduled for August, but it has been extended five times and is now Friday. There is a chance it could be extended again.
Several weeks ago, the County Board gave Schillerstrom an extra month to come up with a budget, in part because board members wanted to wait for the outcome of the cigarette tax. He must present his proposal to the board next Tuesday. Schillerstrom and other county officials have made numerous trips to the state capital to lobby for the tax bill.
“If we don’t find a new revenue source, there will be significant cuts made (to the budget) that will have a serious impact on people’s lives,” Schillerstrom said last month. “It’s not like we have a budget with a lot of fat in it that you can go pare out a certain percentage and it won’t have any impact on people’s lives.”
Schillerstrom has predicted the tax could generate as much as $25 million in new revenue each year. Without an increase in revenue, cuts will have to be made and that could include jobs, though Schillerstrom has not said how many positions are at risk.
Laurence Msall, president of the Civic Federation, a Chicago-based nonpartisan budget watchdog, said a cigarette tax can be an effective way of closing a budget gap, but should be used to offset the health care costs created by smoking. He would not comment specifically on DuPage County’s situation because the budget has not yet been proposed.
“A great deal of spending in DuPage and in other counties is health care and health-related services,” Msall said. “In general terms, cigarette taxes have proven to be very politically popular among the general public both as a means for raising revenue and discouraging people from smoking.”
Msall said he does not consider a cigarette tax regressive because smokers chose whether or not to buy cigarettes. But that choice also can make revenue generated by the tax fall short of predictions. If smokers go to neighboring counties with lower taxes to buy their cigarettes or kick the habit altogether, the tax may not create as much revenue as expected, he said.
But the future of the cigarette tax still remains uncertain. Some of DuPage’s own state representatives have not committed to supporting the bill.
“I’m for DuPage County getting the revenue they need, but there are other things in there besides DuPage County,” said state Rep. Bob Biggins, R-41st District, of Elmhurst.
On top of the $1 tax DuPage and other Chicago-area counties would be allowed to add to a pack of cigarettes, the bill would also implement an additional state tax.
Biggins said without seeing the final version of the bill he would be voting on, he could not say if he would vote in favor of it.
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NTUI NEWS RELEASE
FOR IMMEDIATE RELEASE -    January 5,2007
   Contact: Jeff Trigg (312) 427-5128 or Jim Tobin (773) 354-2076 (cell)
 
 
NTUI RELEASES OPEN LETTER TO PRESIDENT JONES AND THE ILLINOIS SENATE CALLING FOR OPPOSITION TO COUNTY CIGARETTE TAXES
 
 
Honorable Senate President Emil Jones, Jr. and all Illinois Senators;

 We urge you to oppose Senate Bill 716 and to let the bill expire this session without action.

 Senate Bill 716 is a bad bill for taxpayers, small businesses, and state government revenues and should be opposed now and in any future versions.

 Every county already has the opportunity to impose cigarette taxes and the current laws do not need to be changed regarding home rule authority. The power to grant home rule authority to counties currently rests with the voters and that power should not be taken by the General Assembly. Du Page and other counties’ voters have spoken at the ballot box numerous times against giving their county the power to tax cigarettes. Those votes must be honored.

 Fiscally, this is a bad bill for state government revenues. State cigarette tax revenues are steadily declining. Through the first six months of FY 2007 state cigarette tax revenues are down $4.3 million from the same time period in FY 2006. FY 2006 state cigarette tax revenues were $120 million lower than FY 2004. Passing Senate Bill 716 will reduce state cigarette tax revenues even more.

 Alongside cigarette tax revenues, cigarette sales across the state are declining. In 2006, 57.5 million fewer packs of cigarettes were sold in Cook County than the previous year. Those reduced sales harm small businesses and our economy even more than the state budget. Senate Bill 716 only places higher hurdles in front of small businesses when we should be knocking down hurdles in front of the American Dream.

 Finally, tobacco consumers have been picked on more than enough in Illinois. Chicago has the highest cigarette tax in the nation, and Illinois should be looking to cap if not reduce cigarette taxes in the state. These taxes are regressive and hit families and the poor the hardest.

 The General Assembly has nothing to gain by passing Senate Bill 716. Doing the counties’ dirty work for them will only present you with harder budget decisions going forward. If the counties want the home rule authority to tax cigarettes, let them go to the voters and ask for it, as they should. Please oppose Senate Bill 716.

###

Jim Tobin is President of National Taxpayers United of Illinois.
Jeff Trigg is the Executive Director.
 
NATIONAL TAXPAYERS UNITED OF ILLINOIS
407 S. Dearborn, Suite 1170 * CHICAGO, ILLINOIS 60605
(312) 427-5128 * Fax (312) 427-5139 * Web Site www.ntui.org> * E-mail ntui@ntui.org>

DuPage predicts major shortages in 2008 budget
September 1, 2007
By Paige Winfield Staff writer
Anticipating hefty 2008 budget cuts, DuPage County Board members gave themselves more time this year to consider how and where to make those cuts.
But now some members are afraid that presenting a budget too early might put in jeopardy the county's chances of gaining a new revenue source.
As the overtime session continues in Springfield, county officials are holding their breath in hopes that DuPage might yet be granted permission to levy a long-sought cigarette tax.
But Springfield legislators may have even less incentive to hand the county its taxation request if they see the budget already being cut, members of the Finance Committee said this week.
Finance Committee Chairman Pat O'Shea said he doesn't want to endanger the chances of getting legislation approved that could bring in $25 million for the county by a $1-per-pack cigarette tax.
Passed by the Senate and awaiting a House vote, the bill imposes a 90-cent cigarette tax increase statewide and allows counties to impose their own taxes.
"If you think (legislators) care about taxation in DuPage County, they don't," O'Shea said.
According to rules changes made by the board earlier this year, Chairman Robert Schillerstrom is required to present a 2008 budget proposal by Sept. 15 -- one month earlier than last year.
Seven of 10 Finance Committee members said they support moving the deadline back to Oct. 15, perhaps through a resolution or rules suspension.
Schillerstrom said he is prepared to delay his budget proposal if action is taken by the board.
Otherwise, he is prepared to present a budget on Sept. 15 that he calls "austere."
Board member Linda Kurzawa said that proposing a budget before the legislative session is over may undermine DuPage's message that the county desperately needs a new revenue source.
"If any action we would take in the budget would give a loophole or conflicting message, I would be afraid of that," she said.
"We've got to be strong on our message that the cigarette tax is the goal."
But board member Jim Healy said the county needs to stop waiting on Springfield to make a move, and he disagrees that a budget proposal will hurt chances for additional revenue.
"What wrong message ... that we're cutting like crazy?" he said.
"I don't think that sends the wrong message. We can't continue to run the county based on what Springfield may or may not do."
County Board members could still be considering departmental budget requests even if they moved up the deadline, said Fred Backfield, the county's chief financial officer
"Nothing prevents doing some hearings right now," Backfield said. "I think the main thing is we don't want to do anything to kill (the cigarette tax)."
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