Detailed facts about the County School Facilities Sales Tax
On April 4, St. Clair County voters will be asked to consider the County School Facilities Sales Tax (CFST) and its potential impact to schools and to property taxes. Residents have a lot of questions about the referendum. Below are some of the most frequently asked questions and their answers.
Q: What is the CFST?
A: The sales tax is the first shift away from property tax funding for local school district dollars in Illinois. It is often referred to as a 1 percent sales tax, or a 1 cent sales tax for school facilities. The CFST revenue does not pass through the Illinois General Assembly. It is collected county-wide and disseminated by the Regional Office of Education to schools in St. Clair County based on student enrollment counts.
Q: How can the funds be used?
A: Legally, the funds generated from CFST can only be used for long-term school facility purposes, such as roof repairs, security entrances, access for disabled students/visitors, or technology infrastructure to name a few. The funds can also be used to refund (pay off) bonds or reduce property taxes levied to pay bonds issued for capital purposes.
Q: Can the funds be used to pay operating costs?
A: The funds cannot be used to pay operating costs, including overhead and salaries or operating expenses, such as purchasing supplies or laptops.
Q: What items are taxed?
A: This is a sales tax on retail purchases. Items that are not taxed include medications (prescription or over-the counter), unprepared grocery foods, vehicles, farm equipment and services. A good rule of thumb is that if an item is not taxed today, it would not taxed by the CFST.
Q: How would these funds be put to use?
A: Every school board gets to determine the use of funds for their school district. Each of the school districts in O’Fallon-Shiloh have committed to using at least half of the CFST revenue to retire existing debt and subsequently decrease the burden of property taxes. The remaining funds would be used for property tax avoidance as projects can be completed in a pay-as-you-go manner using the sales tax funds, or bonds can be issued against the future sales tax revenue, thereby eliminating the need to request a tax increase to fund said project.
District 90 specifically has committed to using 60-70 percent to retire existing debt from the construction of Moye Elementary, Carriel Junior High and recent energy savings projects. Based on that figure, a 19.6 cent property tax reduction is possible for District 90.
A 19.6 cent property tax reduction is worth approximately $64 on a $100,000 market value home. A homeowner has to purchase $6,400 of taxable goods (see above) in order to incur $64 of sales tax expense. So a homeowner of a $250,000 home would have to spend over $16,000 in taxable items to outweigh the benefit of the same property tax relief.
In addition to that, OTHS has committed to using 50 percent of the revenue for abatement, or a 7 cent reduction. The owner of a $250,000 home in Districts 90 and 203 would have to spend over $22,000 each year on retail purchases to outweigh the CFST property tax relief.
Q: How is this type of a decrease in property taxes possible?
A: A sales tax is not only paid for by those who live in the county. Visitors also pay sales taxes when they travel through St. Clair County or come from a neighboring county to take advantage of our amenities. Because the sales tax for school facilities can be used to pay off existing debt, the revenue generated from those visiting the county can pay off the debt that is currently passed on to property owners.
This story was originally published February 8, 2017 at 11:10 AM with the headline "Detailed facts about the County School Facilities Sales Tax."