Woodstock City Council talks sales tax rebate for Woodstock Lumber

WOODSTOCK – Woodstock officials are favoring a tax rebate incentive for Woodstock Lumber in response to a concern that the city's sales tax increase will drive away business once it goes into effect Jan 1.

The Woodstock City Council voted to implement a raise in the city’s sales tax in September after several months of public hearings, discussion and mixed community input.

The sales tax hike will tack a percentage point onto Woodstock’s existing 7 percent sales tax rate, and Woodstock Lumber is concerned that the rate increase will put the company at a competitive disadvantage.

"Woodstock Lumber competes for every sale with Alexander Lumber out of Ridgefield with
7 percent tax, Ed Hines Lumber out of Hampshire with 7 percent and many Wisconsin yards at 5.5 percent tax," Woodstock Lumber President Mark Kammermeier wrote in an email to Mayor Brian Sager. "When we are selling $100,000 worth of building material to one individual, just the smallest difference can make the difference between a sale and a lost sale."

At 8 percent, Woodstock’s sales tax rate now will be a quarter of a percentage point above some other McHenry County communities, as well, such as Crystal Lake and Algonquin. Both Crystal Lake and Algonquin have sales tax rates of 7.75 percent.

Only the home rule sales tax portion paid to the city could be eligible for the rebate, not state sales tax. Woodstock Lumber would be in charge of providing a discount to its customers under the agreement, as the city would pay the refund directly to the company three times annually, according to city documents.

The rebate only would apply to cumulative orders totaling more than $20,000 in a four-month period, city officials said.

"The calculation of this $20,000 amount is a little tricky, as the business tracks the
products sold on the basis of a single load, as it is packed and shipped out on a truck. None of these single daily orders will meet that $20,000 threshold," Economic Development Director Garret Anderson wrote in a memo to the council. "But one building project might take a new load of materials every day for multiple months and far exceed this amount."

Council member Mike Turner said he saw the program as an appropriate response to something that could cause downfall to a community business.

“I like the $20,000 amount. It’s substantial,” Turner said. “You can see how someone would buy that somewhere else. This is a very specific program meant to assist a local business that clearly finds themselves at a competitive disadvantage. … I don’t see this as picking winners and losers. I see this as good, responsive government.”

City Council members will vote on an official agreement at a future meeting.