Eye On Illinois: Online or in person, sales tax spikes mean shoppers are spending

When it comes to municipal budgeting, can you ever have too much information?

Consider the remarks of Justin Miller, finance director for the city of Peru, who wants to pinpoint why his community will take in almost $7 million in sales tax this year as compared to $6.3 million in 2020.

“Obviously, we’re very, very happy,” Miller told Shaw Media’s Tom Collins. “But also you kind of get into a situation where you want to understand it better from a forecasting standpoint.”

Miller and others Collins interviewed traced an uptick in sales tax receipts this year to the Leveling the Playing Field Retail Act, which changed collection practices for online retailers. They’re all getting more money, but they don’t know precisely where the sales originate, which makes budgeting difficult.

“All brick and mortar and online sales are filed with (the Illinois Department of Revenue) on the same form,” said IDOR spokeswoman Maura Kownacki. “As a result, tax disbursements made to local governments all come from the same bucket and no definitive distinction can be made. There is no way to break down which sales are online when they are all reported the same way.”

File it under “good problem to have.” Sales tax disbursements being up means sales are up which means people have money to spend. These types of figures — Oglesby Finance Commissioner Tom Argubright said his city is on pace for an annual jump of 31% — can’t be the result of recent inflation or a holiday rush. They represent a dramatic shift, but the question is whether the change is in consumer habits or simply the way the beans are counted.

An individual municipality can manage the uncertainty by budgeting based on pre-2021 trends, at least until there are two or three years of data under the new system. If revenues exceed projections, officials can spend the extra on short-term needs or perhaps find a way to offset property taxes.

In the big picture, the IDOR and state lawmakers can listen to local folks to determine if the new law has unintended consequences and whether an amendment might provide helpful mitigation. Or this could just be an instance where everyone eventually adjusts to the new normal. After all, having more money than expected is the kind of problem government officials embrace solving.

No matter what, winding down the holiday shopping season with reports of retailers doing well is a comfort. Despite widespread concern about supply chain disruption and COVID-19 mitigation rules hampering the retail climate, it appears many of the businesses that rely on December to remain profitable are meeting those goals.

Christmas doesn’t come from a store, but a healthy economy usually delivers a happy holiday season.

• Scott T. Holland writes about state government issues for Shaw Media. Follow him on Twitter @sth749. He can be reached at sholland@shawmedia.com.