Friday, August 17, 2007

Ask and Ye Shall Receive

Here's the Chamber of Commerce's position paper on the proposed sales tax. The Chamber is also mailing out copies to all members.

Carbondale Chamber of Commerce

Board of Directors

August 15, 2007

Official Statement in Favor of the “Proposal to Invest in the Future of Carbondale:”

The Carbondale Chamber of Commerce Board of Directors would like to officially express their support of the proposal submitted by the City of Carbondale for a 0.5% increase in the Carbondale home rule sales tax. After sufficient research and discussion, it is the opinion of the Board that this proposal is a direct investment in the future prosperity of Carbondale and its businesses.

The proposal estimates that a 0.5% increase in Carbondale’s sales tax will generate approximately $2.3 million annually. Due to increases in various operating expenses, the City of Carbondale must find another source of revenue. A portion of this revenue will be used to continue providing its citizens with quality services and to fund many of Carbondale’s diverse community organizations.

Carbondale is in urgent need of a new Public Safely Center, which will house the Carbondale Police Department, Carbondale Fire Department Administration, and Carbondale Emergency Management Services. The Westside Fire Station located on south Oakland Avenue will also be replaced. The current facilities for these departments are inadequate and must be replaced in the near future. The extra revenue generated by the Proposal will also go to fund open space projects such as greenways, bikeways, and sidewalks, which will improve Carbondale both functionally and aesthetically. Additionally, a one-time grant of $35,000 will be given to the Carbondale Park District for necessary infrastructure improvements.

Another portion of the subsequent revenue will go towards funding Southern Illinois University Carbondale’s “Saluki Way” project. This will be in the form of a $20 million donation over the next 20 years, and will primarily support the renovation of the SIU Arena, and the replacement of McAndrew stadium. These two facilities host events year-round, which are attended by thousands of people from across the country. Improvements to these venues will make them more accommodating, and therefore more attractive to prospective event coordinators and entertainers. Increased traffic to the SIU Arena and Mc Andrew Stadium will bring thousands of new consumers to Carbondale businesses. This large investment in SIUC, one of our community’s greatest resources, will likely bring millions of sales dollars into Carbondale, strengthening our economy.

The Chamber Board of Directors considers this proposal to be a clear, specific plan which will directly benefit Carbondale, its businesses and its citizens. As shown in Exhibit 5 of the Proposal, there are defined financial targets that will have to be met to fund the projects in a financially responsible way. It is the opinion of the Chamber that the City of Carbondale has consistently produced accurate forecasts in their budgeting processes over the past several years, and this plan is expected to follow suit. Therefore, we support the Proposal to Invest in the Future of Carbondale, and feel that it will have a positive impact on the members of the Carbondale Chamber of Commerce.

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"Hope" is not a plan, as any businessman knows. But this statement by the Chamber of Commerce is laced with hope and, unfortunately, obfuscation.

Here is a portion of the statement: "This large investment in SIUC, one of our community’s greatest resources, will likely bring millions of sales dollars into Carbondale, strengthening our economy." Please notice the "likely" part of the statement. In fact it is not an "investment" since there will be neither ownership nor management direction from the people of Carbondale. It is a gift of $20 million. Nor has any reputable quantitative analysis shown that this gift of $20 million will result in any increase whatsoever in the economy. It is, in other words, a faith statement.

Secondly, the Chamber of Commerce must know that numbers are the heart of business, yet they obfuscate the numbers. Here it is: "The proposal estimates that a 0.5% increase in Carbondale’s sales tax will generate approximately $2.3 million annually." The increase in Carbondale's sales tax, presently at 6.75% is nearly 10% not 0.5%. The increase in the tax rate is 1/2 cent per dollar, raising the sales tax to 7.75%.

Most people that I have spoken to have been open to the expenditure of increased tax revenues on the infrastructure of the town, but they do not favor a gift to the university. It ties the hands of city officials for the next 20 years, an unacceptable handicap for our town.

However, most importantly, a tax increse of this size should be decided by the people. A referendum is in order.
What troubles me most is that this is just another way of funding Saluki Way on the backs of the students. They've already been stuck with a fee increase for it and now they'd have to take on a significant part of the tax burden as well.

If we really want to fund infrastructure improvements, it ought to be done with a property tax so that the people who benefit most -- business owners -- pay a more fair share for the improvements.
As I've pointed out in another post, research by economists on the impact of stadium and area upgrades to the local economy indicates there is no benefit financially to the community and quite often it creates a net loss. The financial benefits of stadium upgrades accrue to the team owners. Since McAndrew Stadium only generates appreciable revenue for the community five times a years (home games), the potential loss is much greater than for a stadium hosting professional teams.
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