SPRINGFIELD, Ill. -- Two lawmakers from West-Central Illinois say they would support an effort to reduce state collection fees that are reducing revenues for smaller units of government.
State Rep. Anthony DeLuca, D-Chicago Heights, has filed legislation that would reduce Illinois collection fees by half. DeLuca told the Associated Press there was not enough time to fully examine a fee hike that was made part of this year's budget bill.
A 2 percent collection fee is imposed on sales taxes collected in municipalities receiving taxes that are higher than the statewide 6.25 percent sales tax. The fee generates about $60 million annually for the state.
"I've heard from (communities) that it does have a very big impact on them," DeLuca told the State Journal-Register. "Where they have a lot of retail in their community, they have a mall, it's been a very big impact on them."
Quincy Comptroller Sheri Ray said the state's collection fee is imposed on the home rule sales tax. The higher fees are expected to reduce Quincy's revenues by nearly $289,000 this year.
Rep. Randy Frese, R-Paloma, said he will support DeLuca's efforts.
"It's counterproductive to pull these taxes from municipalities that use them for betterment of the local area," Frese said.
Sen. Jil Tracy, R-Quincy, said DeLuca is a former mayor, and he is likely hearing from smaller units of government that the revenue drain creates problems.
"Local governments provide services to all of us -- roads, EMTs and other services. These collection fees make that harder," Tracy said.
She also believes the higher collection fees are hitting cities at a time when sales tax collections have either plateaued or declined due to online sales.
Tracy said online tax issues are generally considered a federal issue because of constitutional restrictions on what states can do. Tracy said Illinois lawmakers might not be able to fix the loss of sales taxes due to online purchases, but they can deal with money that is being diverted by the state.
DeLuca's proposal, HB4101, is winning support in other parts of the state as well.
Springfield budget director Bill McCarty said the fee is costing Springfield $840,000 in sales tax revenue that would normally go into city coffers.
"We're working hard advocating to get this reduced," McCarty said. "The bottom line is I think we can all agree that there's no way that it takes $60 million for the Department of Revenue to collect city sales tax. Not when they're already collecting state sales tax anyway. It's a surtax on communities to help the state balance its books."
The Illinois Municipal League, which represents cities, counties and other units of government across the state, also has called for a reduction in the collection fee.
The Associated Press provided information for this story.