Local Sources of Municipal Revenue

By ROGER HUEBNER, Staff Attorney, Illinois Municipal League
Revised September 1988

This information was originally prepared by Frank M. Pfeifer. Mr. Pfeifer served from January 1945 through December 1984, first as Legislative Counsel then as General Counsel to the Illinois Municipal League. This information has been previously amended for print by Thomas W. Kelty, Chief Counsel, Illinois Municipal League.

In addition this outline has been updated for the Illinois Municipal Handbook annually by Louis Ancel and Stewart H. Diamond both partners in the law firm of Ancel, Glink, Diamond, Murphy & Cope, P.C.

All of the items mentioned below apply to both home rule and non-home rule municipalities. Home rule municipalities have additional powers in some of these matters, but no attempt will be made to cover them in this article.

I. MUNICIPAL STATUTORY LICENSING POWER

A. Only those businesses and occupations may be regulated and licensed for which there is specific statutory authority or reasonable implication therefor.

B: Power to regulate a general subject matter may be construed to authorize the regulating of all businesses concerned with that general subject matter.

C. The following businesses and occupations may be regulated and licensed and in some instances taxed and located, dependent upon the wording of the particular section of the statute.

  1. Amusements (Ch. 24, Sec. 11-42-5), including but not necessarily limited to:

Circuses
Coin Operated Games or Musical Devices
Motion Pictures
Public Dances
Shooting Galleries
Skating Rinks

Alcoholic Liquor Dealers — Retail
Bakeries
Food Manufacturers
Food Delivery Vehicles
Fruit Stores
Grocery Stores
Ice Cream Parlors
Markets
Meat Dealers
Milk Dealers
Restaurants
Tobacco

November 1988 / Illinois Municipal Review / Page 21

54. Intoxicating Liquor Dealers (Ch. 43, Par. 110)
55. Itinerant Merchants (Ch. 24, Sec. 11-42-5)
56. Junk Yards (Ch. 24, Sec. 11-42-3)
57. Laundries (Ch. 24, Sec. 11-42-8)
58. Livery Stables (Ch. 24, Sec. 11-42-1)
59. Lumber Yards (Ch. 24, Sec. 11-42-1)
60. Machine Shops (Ch. 24, Sec. 11-42-8)
61. Mason Contractors (Ch. 24, Sec. 11-36-1)
62. Medical Dispensaries (Ch. 24, Sec. 11-22-1)
63. Money Changers (Ch. 24, Sec. 11-42-1)
64. Mobile Homes (Ch. 24, Sec. 11-5-8)
65. Motor Vehicles, Dealers in dismantled or wrecked vehicles (Ch. 24, Sec. 11-42-3)
66. Nursing Homes and Homes for the Aged (Ch. Ill's, Par. 4153-104)
67. Oil and Gas Mines (Ch. 24, Sec. 11-56-1)
68. Omnibus Drivers (Ch. 24, Sec. 11-42-6)
69. Packing Houses (Ch. 24, Sec. 11-42-7)
70. Parking Garages, lots and ramps (Ch. 24, Sec. 11-42-12)
71. Pawnbrokers (Ch. 24, Sec. 11-42-5)
72. Peddlers (Ch. 24, Sec. 11-42-5)
73. Pigeonhole Tables (Ch. 24, Sec. 11-42-2)
74. Pin Ball (Ch. 24, Sec. 11-42-2)
75. Pool Tables (Ch. 24, Sec. 11-42-2)
76. Porters (Ch. 24, Sec. 11-42-6)
77. Public Houses, Runners for (Ch. 24, Sec. 11-42-4)
78. Public Scales (Ch. 24, Sec. 11-42-1)
79. Railroads, Runners for (Ch. 24, Sec. 11-42-4)
80. Rooming Houses (Ch. 24, Sec. 11-30-3)
81. Scavengers and Garbage Collectors (Strub v. Deerfield, 19 111. 2d 401)
82. Second-Hand Articles (Ch. 24, Sec. 11-42-3)
83. Ships, Runners for (Ch. 24, Sec. 11-42-4)
84. Shows (Ch. 24, Sec. 11-42-5)
85. Steam Boiler Operator (Ch. 24, Sec. 11-34-1)
86. Street Advertising, Sign Painting (Ch. 24, Sec. 11-80-15)
87. Street Sales (Ch. 24, Sec. 11-80-20)
88. Tanneries (Ch. 24, Sec. 11-42-7)
89. Taxicabs (Ch. 24, Sec. 11-42-6)
90. Telephone, Telegraph (Ch. 24, Sec. 8-11-2)
91. Theatricals (Ch. 24, Sec. 11-42-5)
92. Theatrical Ticket Brokers (Ch. 24, Sec. 11-42-1)
93. Trailer Coach Park (Ch. 24, Sec. 11-42-8b)
94. Trailer Coach Parks Act, incorporation by reference (Ch. 24, Sec. 11-42-8a)
95. Transient Vendors (Ch. 24, Sec. 11-42-5)
96. Undertakers (Ch. 24, Sec. 11-22-1)
97. Vehicles, special charter municipalities (Ch. 24, Sec. 11-41-1)
98. Water (Ch. 24, Sec. 8-11-2)
99. Weights and Measures (Ch. 24, Sec. 11-53-1)

II. SPECIAL MUNICIPAL TAXES WHICH MAY BE
LEVIED IF APPROVED BY A REFERENDUM

Proceeds from special taxes approved by referendum can be used only for the purpose designated by the particular statute.

  1. Airport Tax (Ch. 24, Sec. 11-103-16) Rate: .10%
  2. Ambulance Tax (Ch. 24, Sec. 11-5-7) Rate: .25%
  3. Blighted Area Redevelopment (Ch. 67'2, Par. 63-91) Rate: Amount necessary to service bonds.
  4. Bridge & Terminal Tax (Ch. 121, Sec. 10-605) Rate: .25%
  5. Community Building Tax (Ch. 24, Sec. 11-63-1) Rate: .075%
  6. Community Mental Health Facilities (Ch. 911/2, Secs. 304, 305) Rate: .0075%
  7. Community Nurse Tax (Ch. 24, Sec. 11-18-2) Rate: .0075%
  8. Corporate "Fund Property Tax (Ch. 24, Sec. 8-3-1) Rate: .4375%
  9. Cultural Activities Tax (Ch. 24, Sec. 11-45-1) Rate: .04%
10. Cultural Centers (Ch. 24, Sec. 11-45.1-4) Rate: .25%
11. Fire Protection Tax (Ch. 24, Sec. 11-7-3) Rate: .40%
12. Forestry Program Tax (Ch. 24, Sec. 11-73-1) Rate: .05%
13. Levee Tax (Ch. 24, Sec. 11-112-1 & 11-112-2) Rate: .1666% limited to period of seven years.
14. Library Tax (Ch. 81, Sec. 3-4) Rate; .40%
15. Library and Gymnasium Tax (Ch. 81, Secs. 74 and 75) Rate: .15% for villages of 2,500 population or less.
16. Mental Health (Ch. 91 1/2, Par. 304 & 305) Rate: .15% (Ch. 24, Sec. 11-29-1) Rate: .10%
17. Monuments and Memorial Tax (Ch. 24, Sec. 11-116-1) Rate: .01%
18. Municipal Band Tax (Ch. 24, Sec. 11-45-1) Rate: .04%
19. Municipal Buildings (Ch. 24, Sec. 11-64-1 and 11-64-2) Rate: Amount sufficient to service bonds.
20. Municipal Coliseum Tax (Ch. 24, Sec. 11-66-1) Rate: .25% to establish a coliseum and .05% annually thereafter to maintain it, in cities and villages under 500,000 population.
21. Municipal Coliseum Tax (Ch. 24, Sec. 11-67-4) Rate: .025% to establish and maintain a coliseum, in any municipality under 75,000 population.
22. Parks and Boulevards Tax (Ch. 24, Sec. 11-99-1) Rate: .03% applies to municipalities of not less than 5,000 nor more than 100,000 population.
23. Playground and Recreation Tax (Ch. 24, Sec. 11-95-7) Rate: .09%
24. Police Protection Tax (Ch. 24, Sec. 11-1-3) Rate: .40%
25. Public Parks Tax (Ch. 24, Sec. 11-98-1) Rate: .075% limited to municipalities of less than 85,000 population.
26. Public Health Board Tax (Ch. 24, Sec. 11-17-1) Rate: .075% limited to municipalities over 100,000 and less than 200,000 population.
27. Public Hospital Tax (Ch. 24, Sec. 11-23-1) Rate: .06% limited to cities of less than 100,000 population.

Page 22 / Illinois Municipal Review / November 1988

28. Railroad Grade Separation Tax (Ch. 24, Sec. 11-58-2) Rate: .50% may not be levied for more than ten successive years.
29. Recreational Programs for the Handicapped (Ch. 24, Sec. 11-95-13) Rate: .02%
30. Restoration of Neglected Cemeteries Tax (Ch. 24, Sec. 11-50-1) Rate: .025% applies to municipalities of less than 25,000 population.
31. Sewage Disposal Plant Tax (Ch. 24, Sec. 11-143-2) Rate: .075% applies to municipalities that are not in a sanitary district.
32. Transportation System Tax (Ch. 24, Sec. 11-120-1) Rate: .03%
33. Tuberculosis Sanatoriums Tax (Ch. 24, Sec. 11-29-1) Rate: .025% for municipalities under 75,000 population or .05% for municipalities over 75,000 population.
34. Waterworks Purchase, Construction or Enlargement Tax (Ch. 24, Sec. 11-128-1) Rate: .1666%, not more than 30 years

III. MUNICIPAL TAXES WHICH MAY BE LEVIED WITHOUT A REFERENDUM

In some instances rates shown may be increased by referendum or by greater than majority vote of the council.

  1. Ambulance Tax (Ch. 24, Sec. 1-5-7) Rate: .015% — May be increased to .25% by referendum.
  2. Bonds (Ch. 24, Sec. 8-5-16) Rate: .5% of assessed value.
  3. Cigarette Tax (Ch. 24, Sec. 8-11-3) Rate: 1 cent per package: It cannot be levied if the "municipal sales tax" is in effect.
  4. Chlorination of Sewage (Ch. 24, Sec. 11-142-3) Rate: .02% — For treatment of sewage to meet requirements of the Pollution Control Board.
  5. City Sewerage Fund Tax (Ch. 24, Sec. 11-143-1) Rate: .01666% — For the extension and maintenance of sewers.
  6. City Water Fund Tax (Ch. 24, Sec. 11-131-1) Rate; .01666% — For the extension and maintenance of waterworks systems.
  7. Corporate Fund Property Tax (Ch. 24, Sec. 8-3-1) Rate: .25% (May be increased to .4375% by referendum.)
  8. Emergency and Disaster Services (Ch. 24, Sec. 8-3-16) Rate; .05% (but no more than 25 cents per capita)
  9. Fire Protection Tax (Ch. 24, Sec. 11-7-1) Rate: .075%
10. Firemen's Pension Fund (Ch. 108 1/2, Sec. 4-118) Rate: Levy whatever rate is necessary to produce the amount needed to meet the requirements of the pension fund.
11. Foreign Fire Insurance Tax (Ch. 24, Sec. 11-10-1) I
12. Garbage Tax (Ch. 24, Sec. 11-19-4) Rate: .10% if population over 25,000 and .20% if population less than 25,000. For the collection and disposal of garbage; in addition, a service charge may be levied by ordinance.
13. Harbor Construction Tax (Ch.24, Sec. 11-123-11) Rate: .0125%— For each of four consecutive years for the construction of a harbor.
14. Illinois Municipal Retirement Fund (Ch. 108 1/2, Par. 7-171) Rate: Levy whatever rate is necessary to meet the requirements of the pension fund.
15. Insurance and Tort Judgments (Ch. 85, Sec. 9-107) Rate: Levy whatever rate is necessary to pay insurance or self-insurance costs, create reserves and to pay judgments or settlements.
16. Joint Recreation Programs for Handicapped (Ch. 24, Sec. 11-95-14) Rate: .02% subject to backdoor referendum
17. Lease of Building from Public Building Commission (Ch. 85, Sec. 1048) Rate: Levy whatever rate is necessary to pay annual rent.
18. Library Tax (Ch. 81, Pars. 3-1; 3-4) Rate: .15% — For the establishment and maintenance of a free public library. (May be increased to .40% by referendum)
19. Mobile Homes Privilege Tax (Ch. 120, Par. 1203, et. seq.) Rate: 15 cents per square foot.
20. Mentally Deficient Persons Facilities (Ch. 24, Sec. 11-29.1-1) Rate: .1% subject to backdoor referendum.
21. Motor Vehicle Tax (Ch. 24, Sec. 8-11-4) Motor vehicles may be taxed within the limits prescribed in the statute.
22. Municipal Auditing Tax (Ch. 24, See. 8-8-8) Rate; Whatever rate is necessary to produce a sum sufficient to meet the cost of the required audit.
23. Municipal Service Occupation Tax (Ch. 24, Sec. 8-11-5) Rate: 1% of the cost price of personal property transferred as an incident to a sale of service.
24. Municipal Use Tax (Ch. 24, Sec. 8-11-6) Rate: 1%, limited to property purchased outside Illinois and registered or licensed in Illinois.
25. Police Pension Fund (Ch. 108 1/2, Sec. 3-125) Rate: Whatever rate is necessary to produce a sum sufficient to meet the requirements of the fund.
26. Police Protection Tax (Ch. 24, Sec. 11-1-3) Rate: .075%
27. Public Building Restoration Fund (Ch. 24, Sec. 11-70-1) Rate: .08333% — For not to exceed ten years to restore municipal buildings damaged by fire or storm.
28. Public Comfort Station Tax (Ch. 24, Sec. 11-21-4) Rate: .0333% — To be used for the establishment, equipment, and maintenance of public comfort stations.
29. Real Estate Tax — See Corporate Fund Property Tax
30. Retailers' Occupation Tax (Sales Tax) (Ch. 24, Sec. 8-11-1) Rate: 1% of gross receipts from retail sales of personal property; proceeds may be used for genera] corporate purposes.
31. School Crossing Guards Tax (Ch. 24, Sec. 11-80-23) Rate: .02% — To be used to hire part-time school crossing guards.
32. Sewage Treatment or Disposal Plants (Ch. 24, Sec. 11-142-1) Rate: .075% —To be used for the operation and maintenance of the plant.

November 1988 / Illinois Municipal Review / Page 23

IV. MISCELLANEOUS SOURCES OF REVENUE

  1. Special Assessments for public improvements (Ch. 24, Sec. 9-1-1 thru 9-5-3)
  2. Cash working fund (Ch. 24, Sec. 8-7-1 thru 8-7-6) Rate: .05%
  3. Inter-track wagering handle 1% (Ch. 8, Sec. 37-26, H 10.1)
  4. Municipal purchase or lease of real and personal property over not to exceed 20-year period. (Ch.24, Secs. ll-76.1 thru 11-76.1-4) Tax to pay installments may be levied subject to back-door referendum. Rate: Amount sufficient to pay the annual installments of rent.
  5. Municipalities may also purchase or lease real and personal property for not to exceed 10 years but with no provision for special tax or back-door referendum. (Ch. 24, Sec. 11-61-3)
  6. Special Services Area Tax (Ch. 120, Sec. 1304)
  7. Accumulation of funds for capital improvements.
     a. Unpledged funds on hand end of fiscal year may be accumulated for a particular purpose.
     b. Cannot exceed 1% of assessed value.
  8. Fines for ordinance violations.
  9. Parking Meter and Parking Lot Revenue.
10. State Income Tax Receipts (Local Government Distributive Fund (Ch. 85, Par. 611)
11. Corporate Personal Property Replacement Revenue (Personal Property Tax Replacement Fund) (Ch. 85, Par. 616)
12. Temporary investment in short-term government bonds. Municipal officials have power and duty to invest idle funds. (Ch. 85, Sec. 902 and Ch. 102, Par. 34)
13. Motor Fuel Tax (Ch. 120, Sec. 424)
14. Utility Franchise Fees.
15. Penalty for late payment of municipal utility bills (Ch. 24, Sec. 11-117-12)
16. Reimbursement for tire protection to Junior Colleges (Ch. 24, Sec.11-6-4)
17. Municipalities may contract with schools, hospitals and shopping centers for the regulation of traffic (Ch. 24, Sec. 1-1-7)

V. APPROPRIATION BUDGET AND LEVY ORDINANCES

  1. Appropriation Ordinances passed within the first quarter of each fiscal year (Ch. 24, Sec. 8-2-9)
     a. Must be published in accordance with Sec. 1-2-4 of Ch. 24.
     b. Must be in detail and each item cover only one subject.
     c. Supplemental appropriation ordinance may be adopted when additional funds become available or when appropriating previously unappropriated fund balance (Ch. 24, Sec. 8-2-9)
     d. Prior to the adoption of the annual appropriation ordinance, corporate authorities of municipalities over 2,000 population at least 10 days prior to the adoption shall make the proposed appropriation ordinance conveniently available to public inspection and hold at least one public hearing thereon. Notice of the hearing shall be given by publication in one or more newspapers at least 10 days prior to the hearing. Notice shall state time and place of hearing where copies of the proposed ordinance is available for examination. Corporate authorities may change the ordinance after the hearing (Ch. 24, Sec. 8-2-9)
  2. Alternate method — Budget Officer (Ch. 24, Secs. 8-2.9-1 thru 8-2.9-10)
     a. Eliminates appropriation ordinance and makes transfer of funds easier.
     b. Can be adopted by two-thirds vote of Council.
  3. A certified copy of the Levy Ordinance must be filed with the County Clerk on or before the second Tuesday in December (Ch. 24, Secs. 8-3-1, et seq.) Municipalities cannot levy more than amount appropriated.

VI. ASSESSMENT OF PROPERTY

Public Act 79-703 amended the revenue act (Ch. 120, Pars. 482, et al.) by reducing the assessed value of property from 50% of fair cash value to 33-1/3% of fair cash value. The new valuations apply to assessments made in 1975 and years following. In the past, most assessments have been on an unrealistic basis and have been assessed at less than 50% of fair cash value.

VII. REGULATORY AND LICENSING POWERS WHICH HAVE BEEN PREEMPTED
The powers to license and regulate the following professions and occupations have been preempted by statute:
  1. Architects (Ch. Ill, Sec. 1203)
  2. Athletic Trainers (Ch. Ill, Sec. 7633)
  3. Barbers, Cosmetologists and Estheticians (Ch. Ill, Sec. 1701-3)
  4. Business and Vocational Schools (Ch. 144, Sec. 162)
  5. Certified Shorthand Reporters (Ch. Ill, Sec. 6241)
  6. Clinical Social Workers (Ch. Ill, Sec. 6387)
  7. Dentists (Ch. Ill, Sec. 2302)
  8. Detection and Deception Examiners (Ch. Ill, Sec. 2432)
  9. Hearing Aid Dispenser (Ch. Ill, Sec. 7433)
10. Insurance Companies (Ch. 73, Sec. 614.1)
11. Insurance Brokers (Ch. 24, Sec. 11-42-1)
12. Land Surveyors (Ch. Ill, Sec. 3234)
13. Nurses (Ch. Ill, Sec. 3549)
14. Nursing Home Administrators (Ch. Ill, Sec. 3686)
15. Occupational Therapists (Ch. Ill, Sec. 3737)
16. Optometrists (Ch. Ill, Sec. 3928)
17. Pharmacists (Ch. Ill, Sec. 4158)
18. Physicians (Ch. Ill, Sec. 4400-6)
19. Physicians Assistants (Ch. Ill, Sec. 4623)
20. Physical Therapists (Ch. Ill, Sec. 4286)

Page 24 / Illinois Municipal Review / November 1988

21. Podiatrists (Ch. Ill, Sec. 4843)
22. Plumbers (Ch. Ill, Sec. 1140)
23. Private Security Guards, Private Detectives and Private Alarm Contractors and Businesses (Ch. Ill, Sec. 2657)
24. Professional Boxing and Wrestling (Ch. Ill, Sec. 5026)
25. Professional Engineering (Ch. Ill, Sec. 5136)
26. Psychologists (Ch. Ill, Sec. 5329)
27. Public Accountants (Ch. Ill, Sec. 5536)
28. Real Estate Brokers and Salesmen (Ch. Ill, Sec. 5833)
29. Social Workers (Ch. Ill, Sec. 6325)
30. Structural Engineers (Ch. Ill, Sec. 6530)
31. Veterinarians (Ch. Ill, Sec. 7026)
32. Water Well and Pump Installation Contractors (Ch. Ill, Sec. 7130) •

November 1988 / Illinois Municipal Review / Page 25