Municipal sales tax for roads returns after Pontiac City Council vote

Thanks to the latest budget passed by the state of Illinois, a key obstacle in raising money for infrastructure projects in the City of Pontiac has been removed.

The new legislation allows municipalities across Illinois to raise their sales tax rates by 1 percentage point without holding and passing a voters referendum.

The City of Pontiac did just that at its July 1 meeting.

The money collected from the new tax will be spent on overdue road repairs.

The city has tried to pass a referendum to secure the funding three times in recent years, each one failing. The most recent setback was in 2022.

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“It is specific that the sales tax can only be used for public infrastructure defined by statute as municipal roads and streets, access roads, bridges, and sidewalks; waste disposal systems; water and sewer line extensions, water distribution and purification facilities, storm water drainage and retention facilities, and sewage treatment facilities,” City administrator Jim Woolford said at the meeting.

He added that it could also go for property tax relief, which read as being defined as “the action of a municipality to reduce the levy for real estate taxes or to avoid an increase in the levy for real estate taxes that would otherwise have been required.”

The city believes it could collect as much $2.1 million from the new tax, money that will make a dramatic difference in what the city can repair in any given year, Woolford said. Motor Fuel Tax and the transportation renewal fund bring in $470,000 a year.

Not all sales are taxed. Under the Retailer Occupation Tax, general merchandise from where the sale originated; foods prepared for on premise consumption; candy and soft drinks and the like are taxable. Groceries, prescription drugs and titled vehicles are exempt.

The last referendum to failed with 56.25% of area residents voting against the tax.

“It was disappointing, but like most tax situations, it was a tough uphill battle,” Mayor Bill Alvey told the Daily Leader at the time. “The concept that we worked with was quite unique and would have made a nice, smooth transition over a number of years to do a lot of infrastructure.”

This article originally appeared on Pontiac Daily Leader: Municipal sales tax for roads returns after Pontiac City Council vote