County School Facilities Sales Tax Presentation for: Montgomery County Schools Illinois February, 2017 Illinois County School Facility Tax Public Act 97-0542 Hillsboro CUSD # 3
Landmark Legislation f or Illinois • Sales tax vs. Property Ta x for Sc hool C apital – A tax on the sales of retail goods paid by consumers vs. a real property tax paid by property owners • Originated in Iowa in 1998 – Adopted by all Counties in Iowa • Passed by the Illinois General Assembly on May 30, 2007 • Recently approved by 8 more counties Hillsboro CUSD #3 2
Illinois County School Facilities Sales Tax Map (as of November 8, 2016) Jo Daviess McHenry Lake 2 Carroll Ogle 1 5 Kane Cook Whiteside Lee Will La Salle Bureau 2 Henry Mercer Kankakee Stark 2 Marshall 2 Knox Livingston Peoria Warren Woodford 1 Iroquois 2 Ford Fulton Tazewell McLean Hancock 2 1 Mason Logan De Witt 2 Menard Adams Piatt Cass Brown 1 Macon Morgan Sangamon Douglas 1 Edgar Scott Pike Coles Christian 1 Shelby Greene Clark Cumberland 1 = Counties with CSFT (47) Jersey Fayette Jasper 1 Bond 1 1 Madison = Counties in which CSFT failed Clay 1 Marion (24). Number indicates how many Clinton 2 St. Clair Wayne times CSFT failed. Washington 1 Jefferson Monroe 2 1 Perry Randolph White Franklin Jackson Gallatin Saline 1 Hardin Union Pope Hillsboro CUSD #3
What is Taxed • Sales Tax Base: – Everything in the municipal and county sales tax base is included in the tax base except for : • Cars, Trucks, ATVs • Boats & RVs • Mobile homes • Unprepared Food • Drugs (including over-the-counter and vitamins) • Farm Equipment and Parts • Farm Inputs • Services are not taxed – If it is not currently taxed, it will not be taxed Hillsboro CUSD #3 4
Uses for Revenue Uses of Sales Tax Ineligible Uses New Facilities Direct Instructional Costs Additions & Renovations Text Books Security, Entrances, Safety, Disabled Access Buses Technology Infrastructure Detached Furniture & Fixtures Architectural Planning Computers Durable Equipment (non-moveable items) Moveable Equipment Fire Prevention and Life Safety Operating Costs Land Acquisition Salaries and Overhead Energy Efficiency Parking Lots Demolition Roof Repairs Refund Bonds or Abate Property Taxes Levied to Pay Bonds Issued for Capital Purposes 5 Hillsboro CUSD #3
How to Use Sales Taxes • Pay as you go capital projects – Sales tax can be saved up over time • Issue new bonds for current capital needs – Support bonds with sales tax • Retire existing debt issued for capital purposes – Abate taxes – annual decision – Refund qualifying debt – locks in abatement • ………Or any combination of the above • Every district decides for themselves how to spend the funds Hillsboro CUSD #3 6
Benefit to Property Taxes Two Ways to Decrease Property Taxes 1. Avoid: A district can avoid levying property taxes by using sales tax funds to pay for facility projects that would have been paid for with property taxes. 2. Reduce : Existing building bonds can be paid with sales tax funds instead of property tax funds. s. 7 Hillsboro CUSD #3
Revenue Distribution Logistics • Revenue is distributed equally for every pupil who lives in the county and attends public school, regardless of the location of that school. • EAV used herein simply to estimate enrollment within the county (i.e. the ratio of EAV in the county equals enrollment in the county). • Real revenue distribution is based on actual enrollment in County as certified to ROE each Fall. 9 Hillsboro CUSD #3
County School Facility Tax Worksheet for Montgomery County Schools D R A F T Debt Capacity and Abatement Impact Per District 1 2 3 4 5 6 7 8 9 10 11 12 13 Estimated Proposed Debt Potential Issuance with 0% Abatement Effective % of Annual Growth in Fiscal Year 2017 Available Based Abatement $ EAV in Sales Tax, 1.25x Final 2015-16 Housed Debt Service per on LESSER of Amount per the 2015-16 Adjusted Annual Coverage @ 5% Maturity of Enrollment District from CSFT Funds or $100,000 House 2015 District Total County Housed Percent of CSFT per Rate for 20 Years Existing adjusted for in- 2015 County Tax FY 2017 Debt Value Based on County District EAV (1) (1) Enrollment Total District (3) (4) Debt County EAV (2) Rate Sheet Service column 12 Montgomery Panhandle CUSD 2 $61,983,040 96% 490 468 10.7% $310,440 $3,095,017 12/1/2027 $325,132 $0.50 $166.95 Montgomery Hillsboro CUSD 3 $181,034,517 98% 1,780 1,738 $1,152,168 $11,486,850 12/1/2033 $1,667,682 $0.64 $212.15 39.5% Montgomery Litchfield CUSD 12 $127,486,626 98% 1,446 1,414 $937,140 $9,343,068 10/1/2020 $858,468 $0.67 $224.46 32.2% Montgomery Nokomis CUSD 22 $47,613,964 92% 633 580 $384,241 $3,830,793 12/1/2035 $362,438 $0.76 $253.73 13.2% Bond Bond County CUSD 2 $154,943,220 1% 1,885 16 $10,344 $103,130 $1,282,775 $0.01 $2.23 0.4% Christian Morrisonville CUSD 1 $40,125,499 4% 335 12 $8,133 $81,085 $187,435 $0.02 $6.76 0.3% Christian Pana CUSD 8 $101,693,014 2% 316 6 $4,226 $42,133 $0 $0.00 $0.00 0.1% Fayette Vandalia CUSD 203 $110,460,232 1% 1,276 19 $12,584 $125,457 $1,459,586 $0.01 $3.80 0.4% Fayette Ramsey CUSD 204 $24,310,544 2% 443 7 0.2% $4,621 $46,073 $67,104 $0.02 $6.34 Macoupin Mount Olive CUSD 5 $33,723,515 17% 496 83 1.9% $55,057 $548,905 $0 $0.00 $0.00 Macoupin North Mac CUSD 34 $119,659,286 2% 1,465 24 0.6% $16,110 $160,617 $497,932 $0.01 $4.49 Madison Highland CUSD 5 $363,334,417 0% 2,893 1 0.0% $877 $8,746 $3,903,786 $0.00 $0.08 Sangamon Auburn CUSD 10 $115,500,966 1% 1,385 8 0.2% $5,184 $51,683 $652,207 $0.00 $1.50 Sangamon Pawnee CUSD 11 $72,801,653 3% 641 20 0.5% $13,562 $135,213 $195,063 $0.02 $6.21 Total $1,554,670,493 4,397 100% $2,914,689 $29,058,769 Value of a Student $663 Prepared by Stifel Nicolaus & Company, Inc. - for additional information please contact Tom Crabtree at 800-230-5151 ext. 8457 February 9, 2017 Calendar Adjusted Net CSFT (1) As reported by ISBE Annual Financial Reports and County (2) Enrollment of County resident students as reported by ISBE Fall Housing Report then adjusted by factor of % of EAV in the County Year at 1% (1) % Change (3) Based on County Sales Tax "CST" then multiplied by 4 to represent 1%, less 2% state fee, automotive sales tas estimate removed (4) Stifel does not guarantee to underwrite at these levels. Interest rates shown are based on curernt interest rate environment. 2002 $2,040,036 N/A 2003 $2,057,138 0.84% 2004 $2,135,616 3.81% 2005 $2,230,642 4.45% 2006 $2,344,868 5.12% 2007 $2,304,710 -1.71% 2008 $2,393,247 3.84% 2009 $2,236,458 -6.55% 2010 $2,396,294 7.15% 2011 $2,467,250 2.96% 2012 $2,802,421 13.58% 2013 $2,881,390 2.82% The Money Follows 10 2014 $3,042,691 5.60% the Student 2015 $2,914,689 -4.21%
The Process • School boards pass a resolution • County Clerk will place on the ballot at the next regularly scheduled election After approval by the voters, the tax will be imposed • Simple majority of votes cast needed to pass • 11 Hillsboro CUSD #3
The Process • The ordinance and the election results must – Be certified by the County Clerk – Filed with the Illinois Department of Revenue • Money is received monthly beginning approximately four months after the tax goes into effect • The money follows the student 13 Hillsboro CUSD #3
Required Language on the Ballot Ballot Language (cannot change): Shall a retailer’s occupation tax and a service occupation tax (commonly referred to as a “Sales Tax”) be imposed in (name of county) at a rate of (insert rate) to be used exclusively for school facility purposes? Hillsboro CUSD #3 12
Distribution of Sales Tax Revenues do not flow through the Illinois General Assembly budget process and are not subject to cuts similar to what districts currently experience relating to State Aid. Distributed by R.O.E. on a per All shoppers in County pay on resident-pupil basis qualified sales The money follows the student 2% withheld by IL Dept. of Revenue – Common to sales taxes 14 H i l l s b o r o C U S D # 3
Election Timelines Election Date April 4, 2017 Pass Resolution* Jan. 17, 2017 (School Districts) Certify the Resolution* No later than (County Clerk) Jan. 26, 2017 Election April 4, 2017 File with IL Dept. of No later than Rev. to Enact Tax May 1, 2017 ** Sales Tax Goes into July 1, 2017 Effect Regional Approximately Superintendent Receive 90 Days after Funds from State July 1, 2017 District Receives New October 2017 Sales Tax Revenues *Per ILCS 5/28 15 ** 5/1/18 filing with IDOR requires County Clerk to certify election results before 5/1/18
Additional Information Below is a link to a 10 minute video that gives a non- technical introduction to the basics of the County School Facilities Sales Tax and how it has been used across the State. http://youtu.be/BLN9yacb4dE Hillsboro CUSD #3 19
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