Sunday, July 20, 2008

Sales Taxes Short

According to this article in today's Southern, even with this year's sales tax increase, the city is coming up about $440,000 short in projected revenues for fiscal year 2008. While the difference can be made up out of the general fund, the city's pension funds are also underfunded and will reduce the general fund by about $4 million over the next few years. This year's sales tax increase was not designed to add revenue to the general fund, but rather to pay for needed improvements to the city: fire station, police departments, greenway improvements, SIUC sports complex. If the economy keeps heading south, we can expect to see the general fund take major hits to pay for keeping pensions at the mandated level.

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Interesting. I distinctly remember the Mayor saying this wouldn't happen, both during the election campaign and during the debate over raising the sales tax. Anyone with a basic understanding of economics could see this coming two years ago, but that apparently doesn't describe the good voters of Carbondale. A city cannot live by sales tax alone.

Side note -- how does this impact the city's gift to the university? Since we weren't allowed to know the details of the agreement before they made the decision, I have no clue. Anyone else?
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