Washington is establishing a Business Development District.
The City Council on Monday unanimously approved creation of the district, as well as a 0.25% sales tax on eligible purchases within the district that goes into effect Jan. 1.
The expansive district covers most of the city's primary commercial areas, stretching along Washington Road
from Washington Plaza on the west end of the city to Wilmor Road .
The additional tax raises the overall sales tax in the district to 9.25%. Food, drugs and titled items like vehicles are not subject to the BDD sales tax.
An estimated $700,000 in revenue generated annually by the BDD sales tax will go toward infrastructure work and business recruitment within the district. Some of the funds will jump-start redevelopment of Washington Plaza.
Also, the money will provide help for existing businesses through programs like facade and beautification grants, and assist in the redevelopment of vacant and underutilized properties.
Several council members said they want to see a reduction in the city's property and/or home rule sales tax to offset the BDD sales tax increase.
"If you're going to reduce one tax burden, I would urge you to reduce the property tax burden," said City Administrator Jeff Fiegenschuh.
"A good portion of our home rule sales tax goes to infrastructure projects, not the general fund for things like salaries. Reducing property taxes would make a real impact."
Alderperson John Blundy noted Tazewell County schools are seeking a 1% school facilities sales tax on the Nov. 3 ballot, "which makes the [BDD sales tax] a tough ask, but it's the right thing to do if we can cut taxes elsewhere."
"This is a tough one," said Alderperson Brandon Moss. "Nobody likes to sit up here and raise a tax. But I've been hearing many concerns the last 6-8 months about vacant properties and empty lots. This is city staff and the council's idea to address those concerns without pushing it onto property taxes."
Alderperson Mike McIntyre said, "More businesses mean more [sales tax] money. If we're not growing, we're not helping anyone in the long run."
Many communities in Tazewell and Peoria counties have a BDD with a sales tax of more than 0.25%. For example, Pekin, Peoria Heights and Bartonville all have district with a 1% sales tax.
