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Retail sales taxes provide extra fuel to energize Southwestern Illinois economy
By ALAN J. ORTBALS

   It's a case of the rich getting richer as large, retail shopping centers are under way in Belleville, Fairview Heights and Collinsville that will generate more sales - and more sales tax dollars - for cities already high in the sales tax pecking order.

   Fairview Heights, long the leader in sales tax receipts in Southwestern Illinois, received almost $11.5 million in municipal and home rule sales taxes last year. The expansion and remodeling of St. Clair Square and the addition of the Shoppes at St. Clair Square, a new life-style center, will pad that total. Because of the large amount of sales tax, the city does not levy a municipal real estate tax, giving residents and businesses relatively low property taxes.

   "Sales tax is still the major revenue source for the city of Fairview Heights and it's obviously very important to us that we maintain the sales levels that we have achieved," said Tim Tolliver, director of land use and development for the city. "Of course, there is increasing competition from some of the surrounding communities, but our revenue has stayed steady for the last few years. There are a number of communities that have seen some declines, but we've been very fortunate in being able to hold a consistent level."

   Tolliver says that although retailers tend to flock together, a community needs to constantly be working to maintain quality and fend off competition from other communities. He points to a number of retail malls in suburban St. Louis that gradually declined in sales and maintenance and eventually succumbed to competitors. According to Tolliver, maintaining the edge is what's so important about the Shoppes at St. Clair Square development.

   After years of weathering the storm of auto dealers defecting to interstate communities, Belleville is enjoying a retail resurgence with two large retail shopping centers currently under development. Wal-Mart will anchor a development at the corner of Carlyle Rd. and Green Mount Rd. on the city's east end and Target will anchor a new shopping center on the south side at Illinois Rte. 15 and Frank Scott Pkwy.

   Mike Malloy, the city's director of economic development and planning, says the loss of the auto dealers was tough but the city ended up stronger in the long run as it forced Belleville to diversify the retail sector of its economy and to work harder at attracting new retail development. According to Malloy, the city's decision some years ago to concentrate on developing the Rte. 15 corridor laid the groundwork for what is visible today.

   "We've looked at Rte. 15 as kind of being the new front door, if you will, to Belleville," said Malloy. "This is kind of the final Good Housekeeping seal of approval to be able to say that. Quite honestly, with this Belleville Crossing project occurring (see story on page 1), we've gotten a tremendous amount of more interest in the Rte. 15 corridor running all the way from Ashley - where Illinois Distributing is - all the way east to our city limits, which is about two miles north of Freeburg."

   Already second in the area in the generation of sales tax with $6.8 million in receipts last year, Belleville is expecting to push that number much higher with the addition of a Wal-Mart Supercenter, Target, Home Depot, Lowe's and a host of other stores and restaurants.

   After years of bi-polarism with pro-development and anti-development forces vying for control, the pro-development voices finally emerged on top in Collinsville. According to Paul Mann, community development and tax increment finance director for the city, the anti-development forces just didn't get it.

   "Sales taxes support the general fund and city services," Mann said. "You either diversify your economy with more retail or industrial development or increase property taxes. If you don't, you're going to see the full cost of providing city services come back on your residential property tax."

   At about $4.2 million in sales tax revenue last year, Collinsville does not rank among the top tier of Southwestern Illinois cities in sales tax receipts, but Mann says two things are going to change that.

   One is the development of Collinsville Crossing, a new shopping center at Interstate 55 and Bluff Rd. that is currently under construction and will be anchored by a Wal-Mart Supercenter and a Home Depot store. According to Mann, this development has already spurred interest in redeveloping the other side of Bluff Rd. and he expects to receive a proposal to create a lifestyle center along that strip very soon.

   Two, unlike most of the other cities in that top tier, Collinsville does not have a home rule sales tax. This may change, says Mann, as the city just recently achieved home rule status (25,000 or more population) and is now discussing the possibility of establishing a home rule sales tax.

   On the other end of the spectrum, however, is East St. Louis. At just $1.6 million in receipts from municipal and home rule sales taxes last year, the city ranks at the bottom of the large cities of Southwestern Illinois. This makes providing basic services and balancing the budget difficult, says Robert Betts, city manager of East St. Louis.

   "It (the lack of sales tax dollars) keeps the city juggling the public funds that we do collect to balance it out where we can not only make sure that our public safety and police and fire is maintained at some kind of an acceptable level, but also our infrastructure improvements and other improvements that are necessary throughout the city, as well as our day-to-day operations," Betts said. "It has a tremendous impact on the city. If it were not for the Casino Queen's tax revenue going into the city's general fund budget, the city would be nearly bankrupt. It's that critical."

   The lack of retail goods available in the community not only causes the city budgetary problems, Betts says, but generates a downward spiral. Low sales tax revenues push the burden of funding city services onto the back of the property tax. Higher property taxes chase residents and businesses away, diminishing the tax base and forcing property taxes higher yet.

   How do you jumpstart some retail development in the city?

   "Well," Betts said, "that is the $6 million dollar question that we have been trying to deal with."

   Betts said he has some ideas about how to get development moving in the city, but it will take a concerted effort on the part of all concerned.

   "We have to have solidarity on moving these things forward," Betts said. "Then we need to approach the governor, the president, our U.S. senators and state senators to make some funds available to have some incentives available for developers to take a second look at East St. Louis. I think we have excellent riverfront potential. I think we could have a beautiful marina at the riverfront for barge traffic. We could have all sorts of things to generate general funds for the city, but again, we have to be of one accord and we have to have the commitment to see it through and stop changing the course every six months."