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Fairview Heights takes a rare sales tax hit


Since the coronavirus pandemic began to impact local business as result of the Illinois governor’s stay-at-home orders and related store closures in mid-March, city of Fairview Heights officials have been wondering what actual effect all of this would have on the local government’s much-needed sales tax revenue.

That information came forward this month as expected because there is a three-month lag time between when the Illinois Department of Revenue collects the sales tax from retail businesses and the time that the municipality receives its share, which for the city itself is 1 percent.

With the shutdown having started on Tuesday, March 17, this means the city only received its normally generated sales tax revenue for roughly the first half of that month. As provided this week by the city’s finance director, Gina Rader, in her report to the City Council, the overall sales tax income for March of 2020 was down by 27.6 per cent or a total of $180,645 over the same time period in 2019.

The coronavirus pandemic that has gripped the nation for three months has a more profound impact on Fairview Heights than in other municipalities in the area because Fairview Heights is only one of two cities in the entire state that does not collect a property owners’ real estate tax, relying more heavily on retail sales tax revenue for the bulk of its operating expenses.

Sales tax income from purchases of goods and services here that are funneled through the state department of revenue then distributed in the aforementioned amount of one per cent back to the city largely represents what is used to cover day-to- day expenses for local government operations.

This means that when there are fewer people shopping in Fairview Heights, the city’s income level goes down accordingly, so several weeks of severely reduced retail sales will affect how much money is available for the municipal government to provide services.

Because retail sales tax income is dropping dramatically over the levels it would have otherwise reached since mid-March, as a result of the mandated stay-at-home orders and stores ceasing to serve customers because of the restrictions issued by Illinois Gov. JB Pritzker, city officials had to approach the current fiscal year’s budget with great care and trepidation.

If the Illinois Department of Revenue continues to follow its established procedures, in July, August and September, the city should be learning what its sales tax income was for the months of April, May and June in 2020, the three months where local businesses have been most dramatically affected by the pandemic this year.

Fairview Heights Director of Economic Development Paul Ellis was a guest speaker for the local Rotary Club during its online virtual meeting held on Tuesday, June 9, and shared a positive note concerning the city’s sales tax income.

Ellis told the Rotarians that the months of January and February of this year, which are traditionally very slow in terms of local shopping, and therefore in producing the city’s sales tax revenue, actually ended up bringing in $50,000 more that the same period of time the previous year, hardly sufficient to make a dent in the shortfall for March alone but still an indication, that when 2020 started, people were coming to Fairview Heights and shopping.

And also despite the pandemic and the resultant status of the economy, Ellis said there are still new businesses coming into the city, inquiring about vacancies, leasing space and planning to open but he could not reveal what they were because contracts on them have not been finalized and in the very competitive retail market, a company, group of stores or corporation is hesitant to let too much information go public too soon because of the chances that a competitor will find out about it and react in some manner that could cause problems.

One new business development that can be spotlighted concerns the pending location of a Chase Bank on the property where the Boston Market restaurant currently stands and was permanently closed a few weeks ago.

Representatives connected with the bank applied with the city for approval of a development plan and special use permit for this location at 6535 N. Illinois St. and received approval from the Fairview Heights Planning Commission which met to hear the case on Tuesday, June 9.

The existing structure that housed Boston Market will be demolished and a new bank building constructed should the city’s aldermanic community committee and full city council, which are the next two steps in the approval process, find no reasons to hold up the plans for this project.

Also projected for the site, which is just under an acre in size, along with a single-story 3323-square-foot bank building, is a drive-up automated teller machine.

The city’s director of land use and development, Andrea Riganti, explained to the planning commission that a special use permit is required along with the development plan approval because the construction of a bank at this location in the Planned Business district is considered to be a substantial enough change that could have an impact on traffic, noise or adjacent properties.

Ellis, in response to a question from the one of the Rotarians taking in his online presentation to the club, said that the city’s elected officials and staff was fortunate to have had the foresight to build up some cash reserves in the past so that there would be some funds available during unanticipated financially difficult times like these.

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