The sales tax in Woodstock will increase next year after the City Council approved a 1-point hike.
The council voted 6-1 Sept. 19 to approve a home-rule sales tax in Woodstock, which will bring the total rate on most purchases to 8 percent starting Jan. 1, 2018.
The current sales-tax rate in Woodstock is 7 percent.
City officials said the move will help diversify Woodstock’s revenue streams and allow them to depend less on property taxes to pay the bills. In spring, the council voted to decrease the city’s property tax levy by 10 percent; most members said at the time they expected a sales tax increase to make up the difference and then some.
“I believe the concept of rebalancing property taxes vs. sales tax is worth considering,” Councilman Mike Turner said before the vote.
The city estimates the home-rule sales tax will bring in $2.5 million in added yearly revenue. Council members said in addition to offsetting property tax cuts, they want to see that money go toward street repairs.
No residents spoke about the tax increase at the Sept. 19 meeting, but at a hearing held Aug. 1, public opinion on the hike was split. At 8 percent, Woodstock’s sales tax will be higher than most neighboring communities — McHenry’s is 7.5 percent, Crystal Lake’s is 7.75 percent and unincorporated McHenry County’s is 7 percent — and so there was some concern from officials and business owners about how the rate would impact sales at local businesses, particularly those specializing in big-ticket items such as construction supplies. The council floated the idea of starting a tax rebate program for such businesses, but that issue will not be considered until a later meeting.
Prior to the vote, some council members questioned whether they should approve a full 1-point increase, and Turner briefly suggested imposing a sunset provision that did not make it into the final motion, but in the end, only Councilman Jim Prindiville voted against the hike.
“I think we’d be better served if we were to cut expenses to meet our financial goals,” Prindiville said. “… The No. 1 thing [residents] want to see here that they see in most communities is more shopping options. That’s the advantage they see in cities like Crystal Lake is there’s more opportunities to do that sort of thing. They’d like to see that here, and in that sense, I’m concerned this proposed tax runs the risk of undermining our efforts to fix those underlying problems to create more shopping opportunities.”
Mayor Brian Sager said the city had been fiscally responsible, pointing to the council’s history of refusing automatic property tax increases allowed under state law. He said council members should view the sales tax increase as a sustainable source of revenue to pay for infrastructure and property tax reductions.
“We have not taken the allowable [Property Tax Extension Limitation Law] tax extension for the last six years because we heard loud and clear from our residents, over and over and over again, that property taxes were too high, and that as a City Council, we needed to do something about it,” Sager said. “We did something about it within the realm of our authority, and that was to reduce property taxes by 10 percent this fiscal year.”
The higher tax rate applies to general merchandise, excluding groceries, medications and titled vehicles.