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Illinois Valley

Record sales taxes?

Local numbers look big, but looks can be a deceiving

Twelve new storefronts opened during the grand opening of Market On Mill on May 3, 2025 in Utica, Illinois.

Summer is nearly over and Utica Mayor David Stewart is happy with attendance at the Market on Mill, the village’s outdoor retail plaza. Very happy.

The plaza featuring 12 portable retail stalls was an overnight hit. Stewart said the owners of brick-and-mortar businesses report spillover traffic from the plaza.

New data from the Illinois Department of Revenue show Utica set retail records in the first two months of the plaza’s operation. So far, the village has collected more retail sales taxes in the past six months than it has in some years. Is that because of the new plaza?

“I can’t say with certainty that the numbers directly reflect the impact of the Market on Mill,” Stewart said. “One reason is definitely the hot weather. The summer was still busy, but I think that if it had cooled off more in the evenings, there would have been more activity on both Mill Street and the Market on Mill.”

Utica businesses kicked off the outdoor dining season by setting up patio furniture, flowers, decorations and canopies on Thursday, May 8, 2025 for customers on Mill Street downtown Utica. The outdoor dining season on Mill Street runs through October.

Stewart has good reason to hedge his bets: Nearly every municipality in Illinois is bringing in more sales taxes. It may not be because the economy is roaring so much as a reflection of how sales taxes are collected these days.

The Taxpayers’ Federation of Illinois explained it this way: Because of a law change that took effect on Jan. 1, retailers shipping online orders into Illinois now collect sales taxes imposed by local governments at the customer’s delivery address. Once upon a time, you paid 6.25% statewide sales tax. That was it.

Not anymore. Illinois consumers are paying more in sales tax on these online purchases, and local governments with their own sales taxes are receiving this additional revenue.

“For instance, someone buying a T-shirt from an online retailer who ships the order from an out-of-state warehouse to an address within La Salle city limits would now pay 7.5% in sales tax,” the TFI said in a statement.

There’s more. The law change also means orders previously subject to Illinois’ “use taxes” are now instead part of the local sales tax base. Put another way, some of the higher sales tax revenues were collected differently and now show up under a different heading.

An aerial view of the  Spring Valley Summerfest on Thursday, June 19, 2025 downtown Spring Valley. The festival features a carnival, live entertainment, food vendors and fireworks on Saturday at dusk.

All of which has opened the floodgates under the sales tax heading. Most Illinois Valley municipalities are experiencing a significant increase in sales taxes.

Peru and Ottawa, for example, each are on pace to finish the year with a share of retail sales of $8 million or more. Neither is complaining about more cash.

“We are pleased that the sales tax revenue stream has been stable and consistently improving,” said Don Harris, treasurer for the City of Ottawa. “Having a diverse consumer-oriented retail environment among local businesses is helpful to maintain this stability, which has been supplemented by the online ordering tax collecting process.”

But for city officials, sales tax data are one of several measures used to understand the local economy. If those numbers are skewed, the big picture gets blurry.

Tracy Mitchell, a certified public accountant and Peru’s finance officer, certainly is happy with the cash receipts but cautioned against drawing any firm conclusions about the city’s retail performance or the economy as a whole.

“It’s impossible to decipher the exact impact due to inflation versus a broader volume of taxable transactions,” Mitchell said. “It is important to note the change in how online sales taxes are being applied that started Jan. 1, which has impacted receipts starting in April.”

La Salle set monthly sales records from January through May and just missed breaking the June record, too. On paper, retail sales are up 17% but John Duncan IV, finance director, is just as hesitant about linking the new revenue with how businesses are actually performing.

“We attribute a significant increase in sales tax revenue to the changes that were made in the distribution of online sales orders and the impact that change had on the City of La Salle,” Duncan said.

The same trend is playing out among La Salle’s neighboring communities. Mendota, Oglesby and Spring Valley all have toppled records and/or are on pace for double-digit increases in retail sales by New Year’s. As with other cities, however, the new figures are skewed and no longer lend themselves to apples-to-apples comparisons when held up to past totals.

Tom Collins

Tom Collins

Tom Collins covers criminal justice in La Salle County.