1% Sales Tax Increase FAQ

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On Monday, September 21, 2015, the Bloomington City Council approved a 1% sales tax increase. We understand topics like this can sometimes be confusing and controversial. Here are answers to some frequently asked questions you may have about sales tax and this recent increase:

When will the tax increase go into effect?
This increase will go into effect on January 1, 2016.

Is the Town of Normal’s sales tax going up also?
Yes, the Town of Normal’s City Council approved a 1% sales tax increase earlier in September, contingent upon the City of Bloomington doing the same.

How much money is the 1% sales tax increase anticipated to generate?
The increase is expected to generate an additional approximately $9.6 M for the City of Bloomington.

How will the revenue generated by the sale tax increase be allocated in Bloomington?
-.25% (or approximately $2.4 M) will go to the County for mental health needs
-.25% (or approximately $2.4 M) will go to street resurfacing, sidewalks and infrastructure
-.50% (or approximately $4.8 M) will go to general operations, including public safety

What does “general operations” mean, exactly?
The City’s General Fund is the source of funds used to pay for most general City operations, everything from purchasing police cars, paying salaries, keeping the street lights on and more. The General Fund covers the majority of City departments and services and makes up about 50% of the City's overall budget. 

The City has struggled with a structural deficit in its General Fund for several years. For Fiscal Year 2017, which runs from May 2016 to April 2017, this structural deficit was projected to be approximately $7 M. The .50% of the sales tax increase that will go to general operations will go a long way to fix this structural deficit, although it will not fix the problem completely. You can see the projections of the General Fund’s structural deficit over coming years, and how the sales tax increase is anticipated to help fix it.

What caused the structural deficit in the City’s General Fund?
The City’s expenses rise every year, and unfortunately expenses are outpacing revenues, even to just maintain programs and services from year to year. Major cost drivers for the City of Bloomington include salaries and benefits, many of which are part of the City's 11 collective bargaining agreements, streets and parks maintenance. The City has over 700 fulltime-equivalent employees, and rising labor costs and declining revenue have been major drivers of the structural deficit.

What kind of items does the sales tax increase apply to?
The sales tax will apply to general merchandise like electronics, clothing and furniture, food you eat at a restaurant and packaged liquor. It will not apply to a ticket to the movie theater, a hotel stay, groceries, prescriptions or vehicle purchases. You can find a chart of what the sales tax does and does not apply to.

Why enact this tax now? Why not wait a few months?
There are only two times a year when changes to Home Rule Sales Tax can be enacted, one being by October 1. Additionally, the County required action sooner rather than later in order to proceed with their mental health initiatives.

If you have other questions, please feel free to email us at