CHICAGO — Setting the stage for a fresh effort to repeal a sales tax increase in Cook County, Ill., Gov. Pat Quinn Saturday signed into law a measure that makes it easier for the Board of Commissioners to override the county president’s veto.
The law lowers the number of votes the 17-member board needs to override a presidential veto to 11 from 14. It’s the latest in a series of efforts to repeal part or all of the wildly unpopular one percentage point sales tax increase sponsored by County President Todd Stroger.
The move comes as the board debates Stroger’s $3 billion fiscal 2010 budget in an effort to pass a final spending plan by Nov. 19.
If the tax is repealed, it would not take effect until July 1, 2010, impacting only about two months — or roughly $32 million — of next year’s budget, county officials said.
Implemented in 2008, the sales tax increase pushed Chicago’s tax to 10.25% from 9.25%, and was projected to bring in an additional $400 million a year, though that figure was adjusted downward several times amid a weak economy. The tax hike put Chicago’s sales tax among the highest in the nation and sparked widespread criticism from the public and local media.
Anti-tax commissioners have made repeated attempts to repeal part or all of the tax. Stroger has three times in the last year vetoed the efforts, with the board each time failing to muster the necessary 14 votes to override the veto.
Quinn said the new law would bring the county in line with the state legislature in requiring a three-fifths majority instead of a four-fifths majority to override a veto.
With the new state law in hand, Commissioner Tony Peraica said he would introduce a measure to repeal the full percentage point increase at a Nov. 18 finance committee meeting, and Commissioner Tim Schneider has sponsored an alternative measure that would cut the increase by half, leaving the sales tax at 9.75%.
For Peraica, a repeal would bring back consumers who he said opted to shop outside the county to avoid the new tax.
“Clearly the shoppers have altered their shopping habits, and are buying large items out of the county,” Peraica said. “Bringing back shoppers will bring back those revenues we didn’t collect, and we’ll bring back the local shopping and consumption patterns that we saw before.”
Peraica said the repeal should be accompanied with a series of spending cuts — including changes in the county’s pension and benefits plans and a 2,000 reduction in its 24,000 workforce — to soften the blow to the county’s bottom line.
“This gives us a year to get ready for it,” he said. “It would have a minimal effect of $32 million in fiscal 2010, and take full effect in 2011, and that would give us sufficient time to reduce the workforce.”
Credit analysts have generally praised the tax as strengthening the county’s fiscal position and warned that a rollback could pressure Cook’s balance sheet. The county was hit with two downgrades ahead of bond sales in August.
Fitch Ratings rates Cook County’s general obligation debt AA-minus, and Moody’s Investors Service rates it Aa3. Standard & Poor’s maintains a AA on the credit.
