Commentary By Scott Reeder | Journalist in Residence, Illinois Policy Institute sreeder@illinoispolicy.org
A Tax on Somebody Else
When on family vacations, I’ve learned to bargain with hotel clerks. Rooms are expensive and prices are negotiable. So with three tired kids in the backseat and my wife seated next to me rolling her eyes, I call one motel after another and try to get the best rate.
And I pay close attention to how much tax is added to each potential motel bill. If one town taxes too much, I go on to the next. It’s not that I’m stingy, but money is finite. If I save some money on a room, I have extra to spend on a nice meal for the family or a trip to a museum or some other attraction while we are on the road.
Hotel occupancy taxes are popular with politicians because they figure the folks who pay them don’t vote in their jurisdiction.
But is the tax good public policy?
I’ve viewed occupancy taxes with a jaundiced eye ever since I covered the General Assembly back in 1988 and observed former Gov. James R. Thompson twisting arms to get lawmakers to funnel hotel taxes into building a new ballpark for the Chicago White Sox.
I remember thinking at the time, “Why can’t the Sox owner pay for his own ballpark?”
Today, lawmakers are considering another hotel tax for – you guessed it – another sports facility. Senate Bill 1859 has been introduced by freshman state Sen. Steve Stadelman, D-Loves Park, and would improve existing Rockford-area sports complexes and create a new, indoor multisport facility.
“If we can improve our facilities, that will make Rockford and the state of Illinois more competitive when it comes to sports industry tourism,” Stadelman said in a news release.
It sounds nice, but the question that comes to my mind is: If the plan is a good one why haven’t entrepreneurs stepped forward and put their own money at risk in hope of a profit?
“If this was a feasible idea, the private sector would have stepped forward and done it,” said Peter Ferrara, a senior fellow with Heartland Institute. “If government is doing it because the private sector isn’t, it’s because it doesn’t make any economic sense.”
But Ferrara, an economist and lawyer, said there is a deeper philosophical issue at play.
“The people who pay this tax don’t live in the communities where it is imposed,” he said. “That’s taxation without representation. Didn’t we fight a revolution over that once?”
I’ve long since stopped wishing taxes on the “other guy” because eventually that “other guy” ends up being me.
Taxes should be broad, low and transparent. The proposed hotel tax for Winnebago County is none of those things.
The city of Rockford now charges a 12 percent room tax, and the proposed county room tax would tack on another two percentage points.
A 14 percent tax is a lot to expect travelers to pay – just for the privilege of sleeping in Rockford.
If local leaders want to increase tourism, how about lowering hotel taxes rather than increasing them? That would make Rockford and Winnebago County a more affordable destination.
Committee Rejects Labor Transparency
Organized labor wants to keep the public in the dark on labor contracts until they are signed and it’s too late for taxpayers to voice any objections to a contract.
The majority of members of the State Government Administration Committee sided with government employee unions in a 14-6 vote on Wednesday and defeated House Bill 2689, which would have required greater transparency.
The bill would have required that tentative contracts be posted online for 14 days and a public hearing would have had to have been held before a contract could be approved.
It was an interesting vote when one considers that the majority of lawmakers profess a desire for more open government. But apparently that’s not the case when it involves union contracts. Labor costs are the most expensive line items in most organizations’ budgets.
State Rep. Jack Franks, D-Woodstock, said he voted against the measure because it didn’t go far enough.
“The unions said the bill picked on them,” he said. “My reaction was, ‘Fine, let’s broaden the bill to include other contracts governments engage in – not just labor contracts.’ Depending on how it is drafted, I think I could vote for it then.”
Here is how state representatives voted:
Yes:
Katherine Cloonen, D-Kankakee
David Harris, R-Mt. Prospect
Dwigh Kay, R-Edwardsville
David McSweeney, R-Cary
Michelle Mussman, D-Schaumburg
Barbara Wheeler, R-Fox Lake
No:
Adam Brown, R-Champaign
John Cabello, R-Loves Park
Fred Crespo, D-Streamwood
Monique Davis, D-Chicago
Keith Farnham, D-Elgin
Laura Fine, D-Glenview
Jack Franks, D-Woodstock
Deborah Mell, D-Chicago
Christian Mitchell, D-Chicago
Robert Pritchard, R-Sycamore
Wayne Rosenthal, R-Litchfield
Carol Sente, D-Lincolnshire
Kathleen Willis, D-Northlake
Sam Yingling, D-Hainesville
Correction: I had a typo in Monday’s Reeder Report. The Edgar Pension ramp ends in 2045, not 2025.
