FINANCIAL ADVISORY BOARD AGENDA ITEM
ACTION REQUESTED:
title
Receive the 2018 Q2 Budget Report
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DEPARTMENT: Finance Department
SUBMITTED BY: Rachel Mayer, Finance Director
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
Quarterly Report
DISCUSSION:
State Actions
In early June, the State of Illinois passed its Fiscal Year 2019 budget. Included in the budget were two provisions that directly impact the City's budget. Those provisions went into effect on July 1st.
* Administrative Fee on Home Rule Sales Tax (HRST) - For the 2018 state budget year, the state implemented a 2% administrative fee on HRST collections. This reduced the City's collection by around $180 thousand annually. In 2019, the state reduced this fee to 1.5% of collections. For 2018 the City projects to see $30 thousand of incremental revenues and around $70 thousand of incremental revenues in 2019.
* Income Tax - The State distributes income taxes through the Local Government Distributive Fund (LGDF) on a per capita basis. For the 2018 state budget year, the state reduced disbursements by 10%. For the 2019 budget year, the state reduced disbursements by 5%. This unanticipated decrease for the 2nd half of 2018, will reduce the City's projected revenues by $312 thousand. It will also reduce the City's budgeted revenues in 2019 by $732 thousand.
United State Supreme Court
On June 21, 2018, the United State Supreme Court issued an opinion in the South Dakota v. Wayfair case. The decision states that governments can require vendors with no physical presence in the state to collect sales tax. The State of Illinois, anticipating this favorable decision passed the Illinois Fairness Act in the 2019 budget that will allow the state to assess the 6.25% use tax on sellers that meet certain requirements. The state anticipates the incremental collection of $150 million in revenues over a 9-month period starting in October. Use tax is distributed based upon a specific formula but is in essence a per capit...
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