Finance Committee of the Cook County Board Approves a Partial Sales Tax Rollback

July 22, 2009

On July 21, 2009 the Finance Committee of the Cook County Board of Commissioners voted to roll back the county’s sales tax rate from 1.75% to 1.25%. If adopted, the amendment would take effect January 1, 2010 and lower the aggregate sales tax rate in the City of Chicago to 9.75%. Aggregate sales tax rates in Suburban Cook County would range between 8.5% and 9.75%, depending on the municipality.

The vote came after a discussion of the county’s Revenue Report, which revealed that as of May 31, 2009, the county had a positive budget variance of approximately $127 million. The committee discussed how the positive budget variance and other factors including budget cuts, increased revenues from patient fees at the Cook County Health and Hospitals System, and increases in user fees could offset the potential impact of the sales tax rollback on revenues in FY2010. Cook County Commissioner Liz Gorman suggested that the sales tax rollback will stimulate the local economy and generate additional sales tax revenues. 

Presently, the composite sales tax rate in the City of Chicago is the highest in the nation amongst major cities. The accompanying chart summarizes composite sales tax rates for selected cities in the United States, including those with the top three highest sales tax rates for major U.S. cities: Chicago, Birmingham, and Los Angeles.

 

A city’s composite sales tax rate is made up of sales taxes levied by various local governments, as demonstrated in the accompanying chart. If the county board enacts the sales tax rollback, and no other local governments within the City of Chicago and Cook County increase their sales tax rate, the margins between the highest sales tax rate in Cook County and the lowest sales tax rate in the collar counties will decrease from 3.25 points to 2.75 points. 

 
 

Cook County President Todd Stroger has 6 working days from July 21, 2009 to veto the amendment. If President Stroger chooses to veto the amendment, the board will require 14 votes to override the veto.