2019/06/24 - Walter's Blog: New State Laws

Following the election of a new governor last November, there were some big changes in the Illinois General Assembly this year. Most of the landmark legislation was approved over the last weekend of the legislative session. We are still sorting through the details, but here are some the issues that will impact the City of O’Fallon.

Minimum wage

The minimum wage will increase in January 1 and again on July 1, 2020. We hire more than 100 part time and seasonal workers each year in Parks and Public Works for summer camps, lifeguards, and maintenance. If we have to pay more to employ these workers, then we will have to evaluate our fees for programs and camps.

Recreational Marijuana

The state legislature approved a comprehensive law legalizing the recreational use of marijuana. We are waiting for the details on how this will be implemented, but cities have the ability to regulate whether stores can operate and can impose a sales tax up to 3%. The new law goes into effect on January 1, so the City Council will consider in the coming months whether to allow the sale of cannabis in O’Fallon.

Online sales tax

A new sales tax was approved where out-of-state online sales will be taxed according to where the product is delivered. This means that the City’s 1% general sales tax and ½% Proposition S sales tax will be assessed on all out-of-state online sales. We are currently receiving revenue from online sales through the state use tax, but we believe this new online sales tax will bring more revenue. In addition, the online sales tax will level the playing field with O’Fallon businesses in that the sales tax will be identical whether you purchase in brick-and-mortar stores or online.

Motor Fuel Tax (MFT)

The Motor Fuel Tax is assessed by the state and a portion of the revenue is allocated to municipalities on a per capita basis. The state legislature approved a Capital Bill that increases the Motor Fuel Tax by 19 cents for gasoline and 24 cents for diesel. After covering various state costs, 80% of the new MFT revenue is allocated to road construction and 20% is distributed to mass transit. Of the 80% road construction share, 60% is dedicated to state projects and 40% goes to local projects and  municipalities according to the existing MFT per capita distribution formula. The increase in MFT is estimated to generate $1.2 billion annually. Of the 80% dedicated for road construction ($988 million), the local share is estimated to be $395 million annually.

Capital Bill

A huge capital bill was approved, and we are still uncertain about what is in it. O’Fallon received $1.6 million for improvements at Central Park Drive and Hartman Lane but we already received a federal grant for the project, so we don’t know what that means. The article also says we received $25,000 for building demolitions, but we did not ask for that and are not sure how they came up with that number. The bill also includes $96 million to extend the Metrolink from Scott Air Force Base to Mid America Airport, which will be a huge project.

The State of Illinois has been in dire financial condition for several years, and it is unclear whether these changes will improve the situation. We will be sorting through these new laws over the next few months, so stay tuned.