Mt. Vernon Register-News

March 2, 2013

King City revenues are on track

The General Corporate Fund shows a $1.9M operating cash balance, despite lower sales tax revenues


MT. VERNON — — In spite of lower sales tax revenues during the third quarter of the fiscal year, revenues are on track.

"I was pleasantly pleased to present the budget review," City Manager Ron Neibert said. "It turned out much better than I hoped."

In the General Corporate Fund, there is only a $300,000 difference between the beginning balance and balance at the end of the third quarter, which happened on Jan. 31. The operating cash balance showed $1.9 million, with an outstanding reimbursement of $500,000 from the Illinois Department of Transporation, which was received this week.

A budgeted deficit at the end of the third quarter was $287,000, however, the actual deficit was reduced to $2,907.

When it comes to sales tax, it is a different story. In the 1 percent sales tax, receipts are down 3.8 percent from the previous year and down 6.2 percent from the budgeted amounts. The decrease it attributed to the construction on Interstate 57/64.

"Much of our sales tax comes from people who drive through the community," Neibert said. "They think, 'let's just get through the construction and get to the next place before we stop.'"

Neibert reported he has checked the sales tax receipts for Ina, which have increased 8 to 10 percent over the same time frame.

"But, you have to remember they bring in less than $10,000 a month in sales tax," Neibert said. "It's just an indication that people are going further down the road."

Neibert said he didn't check with Marion or Effingham, as there is similar Interstate construction going on in those communities.

City Finance Director Merle Hollmann reported Mt. Vernon's sales taxes are "catching up with Marion."

"Our sales tax is increasing more rapidly than Marion's are," Hollmann said.

Revenues in the 1 percent Home Rule Tax — which does not include a .5 percent Home Rule Tax that is allocated to bond payments — came in 2.3 percent lower than last year, and 4.2 percent less than budgeted. The .5 percent Home Rule Tax, which started in October, brought in $35,000 less than anticipated.

"The 1 percent Home Rule Tax is our largest revenue source," Hollmann explained. We've been able to overcome (the deficit) through reduced expenses and the state income taxes are up.

The State Income Tax is the 5 percent income tax collected from employees in the state. Three percent of it is then redistributed to municipalities based on population. The remaining 2 percent remains in state coffers.

The state income tax receipts for the city are up by 2.8 percent over last year. The January receipts were up 13.6 percent from January 2012, and the December receipts were up 10.9 percent, from December 2012.

"The state income tax is reflective of the state economy," Hollmann said. "It's a switch for the state economy to be doing better than we expected."