Sales Tax Sharing Concept 'Dead' But Not Buried | WGLT

Sales Tax Sharing Concept 'Dead' But Not Buried

Jun 14, 2016

Looking toward Normal from Bloomington along Veteran's Parkway.
Credit Ralph Weisheit

Bloomington's mayor said a sales tax sharing proposal is "dead, in the short term at least" after a majority of aldermen decided against further discussions. 

However, Mayor Tari Renner said the proposal could resurface after the April 2017 municipal elections.

"I am disappointed. We had a 5 to 4 vote on the council to not even explore or analyze this possibility," said Renner.

Renner and 4th Ward Alderman Amelia Buragas, both supporters of the concept, were guests on Sound Ideas.  Aldermen David Sage, Joni Panter, and Karen Schmidt, three of the five votes against moving forward on the sales tax sharing discussion, have been invited to appear on a future episode of Sound Ideas.

The sales tax sharing proposal being discussed by an ad-hoc committee of elected officials from the town and city would have created a sales tax area encompassing both communities to reduce competition, reduce the possibility of business poaching, and encourage joint economic development.  The tax would have been split based on population. A current sales tax sharing zone, the Metro Zone on Bloomington-Normal's west side would have been dissolved.

"The decision was to not have a broader conversation and I think that's somewhat concerning," said Buragas. "The Town of Normal approached the City of Bloomington and asked us to consider this proposal, keeping in mind there's no formal proposal, there's no exact agreement the City of Bloomington is being asked to say yes or no to. What we were being asked to do was engage in a conversation with the starting point of potentially having a shared sales tax agreement."

The end point could have been somewhere else, according to Buragas. She said the proposal was more in the context of a broader conversation about how the community could better address, cooperate on,  and enhance economic activity.

The ad-hoc committee came together following the announcement Kroger would move from its current location on College Avenue in Normal and build a $25 million facility a few blocks to the east on College, in Bloomington. The City has agreed to rebate $2.5 million dollars in sales taxes as part of an incentive package.

"Kroger is actually a good example of how our starting point and end point could be different," said Buragas.  "Kroger is a specific thing where one business is moving from Normal into Bloomington and that has a detrimental effect on Normal's tax base. There are other communities who have not entered into a full tax sharing agreement but have found ways to minimize that impact in the short term by saying some of the tax money generated by that particular company would flow back into the original community for a period of time. All of these different iterations of this bigger idea are things I hoped we could have had an opportunity to discuss."

Both Buragas and Renner think the process to bring the concept forward was appropriate, typical, and didn't cause its ultimate demise. The conversations started in early March among some town and city elected officials both attending the One Voice economic development trip to Washington D.C. It continued with further idea sharing and some research, according to Buragas. She said what is unusual is that future conversation about the sales tax sharing concept was cut off by a majority of the Bloomington council before an actual proposal was forwarded for further discussion or a formal vote.

The sales tax sharing concept was endorsed by the Bloomington-Normal Economic Development Council, B-N Advantage, and the Chamber of Commerce. The City of Bloomington's  budget, in effect since May 1, provides $390,000 in new sales tax revenue to B-N Advantage. When asked what the decision means regarding confidence in those organizations, Renner said,"There are definitely concerns. I'm concerned as Mayor."

"I think it would be a shame if this vote were interpreted as a vote of no confidence in those institutions. I think, on the whole, the City of Bloomington very much listens to our partners in the community and respects their opinions and hopes to be informed by them," said Buragas.

She said she understands the strong reaction, both positive and negative, to the proposal. It is an unusual concept, according to Buragaas. She agreed that conversation was shut off prematurely.

"I think as a council we could have taken the opportunity to learn more, regardless of our initial positions."