School superintendents across Lake County are discussing a possible referendum to establish a countywide 1% sales tax that would generate more than $122 million in revenue, with $14 million going to Waukegan Community Unit School District 60.
Adding the tax would require the approval of a majority of Lake County voters after school districts representing 50% of the county’s public school students take the steps necessary to place it before the voters.
District 60 Superintendent Theresa Plascencia said the superintendents around the county are having discussions about asking voters to approve a 1% sales tax to support education. The educators like the idea, she said.
The District 60 Board of Education learned about the idea of possibly receiving revenue from sales taxes during a briefing from Plascencia and a financial consultant on Tuesday at the Education Service Center in Waukegan, so they can begin to evaluate the proposition.
“I do want the board to know this is the initial conversation,” she said. “This is the initial conversation to let you know what we’re thinking, and make you aware of what we’re considering, because 52% of the (sales) taxpayers are out of Lake County.”
Elizabeth Hennessy, a managing director with Raymond James, the district’s financial advisor for bonds, said state law allows counties other than Cook County to implement a sales tax of no more than 1% for certain educational expenses a school district incurs.
If school districts representing more than 50% of public school students in the county pass a resolution favoring the tax, Hennessy said Regional Superintendent of Schools for Lake County Michael Karner is required to take the steps necessary to place the question before voters.
Karner said Thursday, Illinois law has allowed up to a 1% sales tax for schools for approximately 17 years. His role is to take steps to put the referendum on the ballot once he receives resolutions from districts representing 50% plus one of the public school population.
“Doing it would make schools less dependent on property taxes,” he said. “I have no resolutions yet. It takes care of aging buildings, school resource officers and mental health. Those are areas of big concern to the districts.”
Of Illinois’ 102 counties, 55 use a sales tax to help fund their schools. Hennessy said many of those counties needed to put a referendum before the voters more than once before it passed.
Hennessy said based on available information from a recent study, a 1% sales tax would generate nearly $123 million in revenue for Lake County’s schools. Karner’s office collects the money and distributes it to school districts based on enrollment.
“That’s a lot of sales tax,” Hennessy said at the meeting. “Importantly, Waukegan has 13,640 students representing 11.7% of that tax. So, on an annual basis, that would mean $14 million to Waukegan public schools.”
District 60’s $323 million budget for the current school year projects property tax revenue of slightly more than $57.3 million. Assistant Superintendent for Business and Financial Services Gwen Polk said in September that balancing the budget will require $39 million from cash reserves.
Other revenue comes from state and federal funding as well as grants. Should the sales tax become a reality, it would increase the district’s share of tax revenue 19.6% without causing a bump in real estate taxes.
“It is $1 for a $100 purchase at Walmart, excluding groceries,” Hennessy said. “It would take Waukegan from an 8.5% sales tax to 9.5%.
Board member Carolina Fabian expressed concern over a 9.5% sales tax in Waukegan. Since the sales tax can be levied in quarter-percent increments —.25%, .5% or .75% — she suggested a smaller amount.
“Our taxes are high in Waukegan (and) median income is lower,” Fabian said. “Have we looked at what it would be if we did .5%? I don’t want to burden our families and add more onto their plates.”
Sales tax revenue cannot be used for all expenses. Salaries and benefits — the largest budget item at nearly 57% of all expenditures — are not included. New buildings, renovations to existing structures, technology infrastructure, security, safety, parking lots, fire prevention and life safety, energy efficiency and roofing are among the permitted expenses.
Exceptions to the salary provision are school resource police officers and mental health professionals if they are specifically mentioned on the ballot. Karner said mental health expenses include both employees and outside counselors.
Should District 60 choose to finance long-term projects by selling bonds, Hennessy said $14,000 a year will retire a $130 million bond issue in 20 years, negating the need for a referendum. If a recession causes people to spend less, sales tax revenue will dip.
Board member Christine Lensing said she is concerned about a potential slide in the economy and will weigh that against the benefits if a resolution for a sales tax referendum is presented to the board for a vote.
“Maybe I have a paranoid brain, but for me, I feel we’re on the brink of a recession,” Lensing said. “As we start to look at this, I think we need to be more informed as to the worst-case scenario if we’re heading that way and time this appropriately.”
Hennessy said the earliest a referendum can appear on the ballot is the Nov. 3 election. The board must pass a resolution by Aug. 17. It needs to be certified to Lake County Clerk Anthony Vega by Aug. 26.
