Special Report: How the City of Rockford Actually Spends the 1% Sales Tax

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When Rockford voters once again passed the one percent sales tax in March, they were told that money would go towards infrastructure.  And it does, but when we took a deeper look at the city’s budgets, we discovered some money is being diverted to cover other costs.

Go to many neighborhoods in Rockford and you’ll see streets patched and re-patched, rises in the pavement acting like invisible speed bumps to unsuspecting motorists.  Sidewalks are worn, cracked, uneven, and overgrown by the grass.  Even newer sidewalks give way to badly worn pathways.  They’re the reason why Rockford resident Marquita Bellmon walks on the street.

“I would like to see people fix it up more, to where people can actually walk on the sidewalk,” said Bellmon.  “That’s what they’re for, [so pedestrians are] not in the street where they can get hit.”

Many of Rockford’s major roads also need help.  Long stretches of 11th Street are potholed and bumpy.  A pickup truck driving on Harrison Blvd looks more like a bouncy house making its way down the street.  These are the pothole-plagued problems the one cent sales tax referendum was passed to fix.

Slick ads, carrying the tagline “Paving the Way”, were produced to encourage voters to renew the one cent tax on sales in Rockford, to help rebuild the city’s crumbling infrastructure.  Voters overwhelmingly voted, “yes.”

Ald. Tom McNamara says the idea was to rebuild neighborhood roads and get non-residents, who come from outside the city, to help pay for them.

“You drive on our roads quite frequently, and I think you should have to pay to drive on those roads,” said McNamara.

But, how are these millions of dollars being spent?

Eyewitness News filed a Freedom of Information Act request to review recent spending of the one cent sales tax.  We found that, while there are a lot of worthwhile projects on it, we also found sales tax dollars budgeted for things like bridge inspections, which the city was paying for long before it had a sales tax.  There were also reforestation costs.  Rockford taxpayer and State Senator Dave Syverson (R-35th) says these are evidence of what he calls a tax “bait and switch.”

“They bring forward the areas that will grab voters’ attention,” said Syverson.  “They go after their hearts.  They say we’ll need money for roads or children… They start using that new money to pay for things they used to pay for, under the old budgets, before they had that new tax.”

Our analysis of city budget figures indicates that, over the past five years, that has happened.  While total city revenue has risen a little more than 4%, the city’s operational expenses have risen 9%t.

So, how did Rockford make up the difference?

It cut funding on capital projects like roads and bridges by more than 14%.

Here’s just one example of how tax switching works.  Back in 2012, city council approved a more than 35% pay increase for the mayor, from $95,000 to nearly $130,000 now.  But, at the time, property tax revenues, to pay for the increase, grew just 1.5%.

So, how to pay for that increase year-after-year-after-year?

The city moved money around, so that costs that used to be paid for by property taxes were now being paid for by sales or other taxes.  Syverson says that’s also what the state did when it enacted the temporary income tax increase in 2011 to pay down bills.

“Governor Quinn said give us a temporary tax increase.  We’re only going to use this money to pay bills, and once the bills are paid, we’re going to take the tax off,” Syverson said.

But, instead of paying down bills, the state wasted money on projects like Chicago’s troubled Neighborhood Recovery Initiative.  And, when the tax increase was set to expire, the state had become so dependent on it, the legislature passed a budget, which included the extra income tax revenue anyway, creating the budget crisis we have now.

No one is accusing Rockford of any wrongdoing in how it spends sales tax money, but like the state, Mayor Larry Morrissey (I) concedes the city needs the sales tax.

“We can’t generate new revenue out of our property taxes,” said Morrissey.  “In fact our property taxes, in fact our property tax take is lower this year compared to last year.  Nevertheless, our costs are higher, so are our labor costs, our pension costs are higher, and so we have to look at other sources.”

The mayor blames higher costs on police and fire salaries and pensions he has little power to control.

“We’re ultimately putting significantly more capital every year into roads and bridges than we have before and I think people see that when they’re out in the field [or] when they drive in the streets.”

But, the sales tax has also allowed the city to spend dollars on things that some consider extravagant, such as the Main Street street signs, which cost taxpayers nearly $275,000.  That’s also nearly the same amount paid to street repairs for all of city council district 12 in 2015.  That district belongs to Finance Chairman and Alderman John Beck.  He defended the pricey signs as important to the city’s economic redevelopment plan.

“In order for us to get out of trouble, we need to be able to invest in our community, and not just in our roads, but to spur more economy activity,” said Beck.

“It’s public infrastructure,” said Morrissey.  “It’s of public value.  It’s not going in my backyard.  It’s not a sauna in my living room, right?”

But, every dollar spent doesn’t go to fixing neighborhood streets.  Syverson believes the next time voters are asked to approve a referendum, they should demand more accountability.

“They should, in the future, say that we are not going to support referendums unless there is some iron clad guarantees that you are not going to divert this money.”

Syverson voted for and supports the sales tax for the reasons the mayor does.  He agrees it has increased infrastructure spending and reduced interest costs.  He just believes more of that tax money should go into repairing neighborhood streets.

Also, we used the mayor’s salary increase to demonstrate rising costs.  But, everyone we talked to believes it was justified.

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