Saturday, November 29, 2008

How Crystal Lake Got More Sales Tax Receipts This Year

I decided to see the damage that Mayor Aaron Shepley and his compliant city council caused local taxpayers with their 75% Crystal Lake city sales tax increase that went into effect July 1st.

The city fathers and mothers forced local shoppers to pull $408,353 more out of their wallets than they they would have had the tax hikers not gotten their way.

But, interesting to me is the fact that collections for the one percentage point upon which Crystal Lake officials piled on their extra 0.75 percentage point for their Home Rule sales tax went down.

Look at Crystal Lake collections for the two years:

7-2007 – $936,674
7-2008 – $896,405
So, regular city sales tax collections took a hit of $40,269 of 4.3%.

The question that came to my mind was, “Is that better or worse that the neighboring town of McHenry?”
Here are City of McHenry figures:

7-2007 – $551,520
7-2008 – $499,352

McHenry was also down. The $52,168 was a larger percentage loss than was seen by Crystal Lake—9.4%.

For a broader gauge, I looked at McHenry County. The figures you see below represent one-quarter of one percent of all McHenry County retail sales:

7-2007 – $642,399
7-2008 – $601,941

McHenry County saw collections decrease by $40,458 or 6.2% since last year.

So, what should we make of that?

If Crystal Lake can see less of a drop in sales tax receipts after it raises its sales tax rate by 75% than a city which kept sales tax rates constant, the law of supply and demand seems to have been repealed.

Higher costs should lead to lower sales.

And, discriminating shoppers like me and a local school janitor were shopping at the Super Walmart in Woodstock, rather than in Crystal Lake.

But I'll bet a lot of folks heading up Route 31 to McHenry and places north stopped at the new Super Walmart in Crystal Lake.

Besides the new Super Walmart, shoppers may have continued to shop in Crystal Lake because there was so little knowledge of the 75% hike in city sales tax as of July 1st.

The Northwest Herald ran no story. The Daily Herald rarely covers things dealing with Crystal Lake.

The city did not even bother to notify the local tax collectors, that is, local stores. Barnes and Noble had to eat the first few days of sales tax, as did at least one store in Downtown Crystal Lake.

Or, it may be that those shopping in Crystal Lake had less of an income drop than those in McHenry.

Or, maybe the

“I Shop Crystal Lake”

campaign worked.

Of a combination of the factors I have mentioned, plus others I missed.

Since Algonquin has the same .075% Home Rule sales tax as Crystal Lake, I took a look there, too.

The figures for Algonquin's Home Rule portion went down $2,514 or under 9/10 of one percent.

7-2007 – $291,831
7-2008 – $289,317

For its regular 1% tax on retail sales, the figures were up $21,980 or up 3.5%:

7-2007 – $536,740
7-2008 – $558,720

Why would the regular sales tax increase, while the Home Rule tax take decreased?

Probably because the Home Rule tax does not apply to food or drugs, while the regular city sales tax does. People stop buying food long after they stop buying non-necessities.

And, new stores are still opening in Algonquin, as you can see at the southwest corner of Randall and County Line Roads.

It also seems to me that as Crystal Lake's shopping opportunity's have deteriorated that shoppers may have driven south.

= = = = =
Notice was apparently not given to all merchants about the tearing up of the Downtown Crystal Lake sidewalks on November 13 that you see at the top of the article. I have also found merchants who were not notified by city officials of the 75% city sales tax hike was effective July 1st.

Published first on McHenry County Blog.


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