A change in the state law on local governments’ use of sales taxes could lead to a significant source of money for fixing Kewanee streets.
At Monday’s City Council meeting, Mayor Gary Moore said state law allows municipalities to add a 1% “retailers’ occupation tax” to local sales taxes.
In the past, the city would have to get voter approval of a referendum to add the retailer tax. Kewanee did that several years ago, adding half a percent to the sales tax to raise money for maintaining water, stormwater and sewer infrastructure.
But a referendum that would have allowed the city to collect the other half-percent of the tax for street repairs failed a couple of years ago.
Now, thanks to the change in the law, the council can implement the other half-percent of the tax without voter approval.
Council members Monday supported that plan. James Webb, the city’s budget director, told the council that a half-percent tax would generate about $860,000 each year.
The half-percent addition to the sales tax would increase the cost to the consumer of a $100 purchase by $0.50.
“It’s small enough that most people aren’t going to notice,” Moore said.
City Manager Gary Bradley said that if the council wants to start collecting the tax next year, they will have to act quickly, as the process of setting up the tax takes several weeks.
Councilman Adam Cernovich said if the council does decide to add the street tax, they should come out with a detailed plan informing the public of which streets would be repaired with the added funds.
The other council members agreed with that.
