Kane County municipalities collect more local sales taxes, thanks to new state law

A state law that as of January 2021 requires online purchases to include local sales taxes is boosting the revenues of local governments.

Though the state does not differentiate between sales taxes that ring up in a brick-and-mortar store or through an online purchase, local officials think the Leveling the Playing Field for Illinois Retail Act played a role.

Geneva Finance Director Rita Kruse said in an email that the city's November sales tax report shows revenue up almost 50% from fiscal year 2020-21. When compared with the same period before the pandemic, the city's sales tax revenue increased 16%, according to Kruse.

"We believe a portion of the increase can be attributed to internet sales tax revenue because other Illinois communities are seeing similar trends in their sales tax receipts," Kruse said.

By the end of November, St. Charles had received about $19 million in sales tax revenues for 2021. It had received $16,591,000 in 2020 and $16,965,000 in 2019.

"We are exceeding our projections for this year," St. Charles City Administrator Heather McGuire said.

McGuire said the new state law is helping level the playing field for municipalities.

"That was a huge loss for municipalities when the internet sales started booming," she said, "because we were losing that traffic and the sales tax base from the people doing online shopping."

Most of the sales tax revenues go to support operations and projects within the city.

"Having the additional revenue to make sure we're able to support development, infrastructure and capital needs is huge for us," McGuire said.

In addition to the state law, McGuire attributed the increase to the fact the state has been in phase 5 of the Restore Illinois reopening plan since last summer and that businesses no longer have occupancy restrictions.

"The push for outdoor dining has been a big help as well for the people that aren't comfortable eating indoors yet, or, as the numbers have fluctuated, still have that as an option and an opportunity," she said.

Some establishments are offering outdoor heated igloos to keep warm during the winter.

Batavia also fared well in sales tax revenue, already at nearly $5.2 million for 2021, up from just under $5 million in 2020 and $5.1 million in 2019.

"Although we can't say what percentage of sales tax receipts are the result of the Leveling the Playing Field Retail Act, we are very pleased with the increase we have seen in our sales tax collections," Batavia Finance Director Peggy Colby said in an email.

"Receipts through November are 15.1% higher than 2020 and 11% more than 2019. The increase over the prior years averages around 9.6%, so we can assume that percentage is due to internet sales, while 5% is due to the economy," Colby's email stated. "While we are optimistic, it is hard to say with certainty if this level of increases will remain over time."

Elburn officials forecast in March 2021 that the village would receive $1,029,000 in sales tax revenue in 2020.

"At the end of November, the village received $753,832, or about 73% of the budgeted amount," Village Administrator John Nevenhoven said. "We have five months left in the fiscal year, and I would expect to exceed the budgeted amount."