Washington, Illinois, will create a Business Development District covering much of the city’s main commercial corridor, after the City Council unanimously approved the plan Monday. A new 0.25% sales tax on eligible purchases in the district takes effect Jan. 1. City officials estimate the tax will raise about $700,000 a year for infrastructure and business development.
Key takeaways
- The district extends along Washington Road, from Washington Plaza to Wilmor Road, and includes most of the city’s primary commercial areas.
- The 0.25% tax will bring the district’s overall sales tax rate to 9.25% on eligible purchases.
- Revenue is intended to support infrastructure, business recruitment, grants and redevelopment projects.
- Council members said they would like to offset the new tax by reducing another local tax burden.
How the district tax will work
The additional sales tax applies to eligible purchases made within the district and is scheduled to begin Jan. 1. Food, drugs and titled items such as vehicles are exempt from the district tax. The city estimates annual revenue of roughly $700,000.
The district covers a broad stretch of Washington’s commercial area along Washington Road, running from Washington Plaza at the city’s western end to Wilmor Road. The city plans to use the revenue for improvements and efforts to attract businesses to the area.
Funding redevelopment and local businesses
Some of the revenue is expected to help launch redevelopment at Washington Plaza. Other planned uses include infrastructure work, assistance for existing businesses through facade and beautification grants, and efforts to redevelop vacant or underused properties.
Council members described the district as a response to concerns about empty storefronts and lots. Alderperson Brandon Moss said the proposal offers a way to address those concerns without shifting the burden to property taxes. Alderperson Mike McIntyre argued that attracting more businesses could grow sales tax revenue over time.
Council weighs possible tax offsets
Although the council approved the district and tax unanimously, several members said they want the city to consider reducing another tax to balance the increase. City Administrator Jeff Fiegenschuh urged officials to look at property taxes, saying a reduction there could make a meaningful difference for residents. He also noted that home rule sales tax revenue supports infrastructure projects, rather than primarily funding general government salaries.
Alderperson John Blundy pointed to a proposed 1% Tazewell County school facilities sales tax measure on the Nov. 3 ballot, saying that added possibility could make the district tax a difficult proposal for shoppers. He said he supported the district if the city could reduce taxes elsewhere.
How Washington compares with nearby districts
Business Development District sales taxes are already in place in several communities in Tazewell and Peoria counties. Pekin, Peoria Heights and Bartonville each have districts with a 1% sales tax, above Washington’s newly approved 0.25% rate.
