2Income Sources Compulsory Income Gratuitous Income Earned Income Investment IncomeContractual Receipts
3Compulsory Income Secured by government organizations Collected through taxing & regulatory powers at different government levelsWhy do commercial agencies care??Types of taxes…??KNR 370 – Discuss mills
4Compulsory Income Real property tax Personal property tax Sales tax Excise taxIncome taxLocal option tax
5How is an individual’s property taxes determined? Question…How is an individual’s property taxes determined?
6Compulsory Income Real property taxes Land & whatever is developed or growing on the landDifferent rates for different levelsPersonal home, business, undeveloped land, farm96% of property taxes stay locally
7Compulsory Income Real property taxes Understand assessed value, tax abatement, tax baseValue defined by a realtor/appraiser/tax assessorFair market valueAssessed value – 30-50% lower than FMV (1/3 in IL)A.V=Taxable worth
8Fair market value = $180,000 listing Assessed Value = $60,000 ($180,000 / 3)
9Compulsory Income Real property taxes Tax abatement Exemption from paying taxesSpecific time periodNew business incentive
10Compulsory Income Real property taxes Tax base Total assessed property value of all taxable property in a communityBloomington vs. HudsonExemptions – NPOs, churches, universities, museums….
11Compulsory Income Real property taxes Tax rates formula Tax rate = Required taxes / net assessed valuationRequired taxes = * Set from budget (ie. $5,000,000)* Expenditures – revenues (excluding taxes)* Where does a city get revenue?
12Compulsory Income Real property taxes Tax rates formula Tax rate = Required taxes / net assessed valuationNet assessed valuation=Total assessed valuation of com. 410,500,000Tax exempt property (abatements) - 10,500,000Net assessed valuation $400,000,000Total assessed valuation of the community
13Compulsory Income Real property taxes Tax rates formula Required taxes/net assessed valuation=tax rate$5,000,000 / $400,000,000 = (1.25%)Also read as $1.25 per $100 assessed value
14Compulsory Income Real property taxes Tax rates formula AV: $100,000 home x = $1,250 tax billAV: $150,000 home x = $1,875 tax billTotal assessed valuation of the community
15Town of Normal Eg Taxing Body Tax Rate % of Total 60,000 AV; 180,000 FMVTown of Normal10.0%$449Normal Library4.5%$203McLean County12.1%$541Township2.0%$89Road & Bridge1.1%$49Water Reclamation District2.1%$95Airport Authority1.4%$65Unit 5 School District60.7%$2,720Community College6.0%$267Total100.0%$4,477
16FYI…Monday – meet in ITDC 103BRead one of the linked articles
17Compulsory Income Real property taxes Personal property taxes Sales taxesExcise taxIncome taxLocal option tax
18Compulsory Income Personal Property taxes Allowed in 41 states (not IL)1. Household tangible propertyAutos, $, livestock, furniture2. Business tangible propertyInventory, business fixtures, furniture, equip3. IntangiblesStocks & bonds
19Town of Normal Eg 0.75% Use tax on titled items cars, boats, motorcyclesSupports General fund
20Compulsory Income Real property taxes Personal property taxes Sales taxesExcise taxIncome taxLocal option tax
21Compulsory Income Sales taxes Largest source of state tax revenue Second largest for citiesImposed on the sale of tangible goodsAt-home food & drugs exemptDE, MT, NH, OR – no sales taxRange 4-10%1-2% stays with local government
22Compulsory Income Sales taxes Dedicated sales tax MO State Parks (1/10 of ea. Cent)Have no entrance feesUsed to fund Bank One Ballpark & renovate Packer StadiumRural towns vs. tourism townsBoulder, CO & Wal-MartNormal vs. Honolulu…
23Tourism Town Comparisons Normal, ILHonolulu CountyTax rates$7.46/$100 AV$0.33/$100 AVTaxes paid on AV $60,000$4,476$197.40HA property tax on same home*$7490$329Honolulu County gives $80,000 credit to FMV. Rest is taxed.Must pay a minimum of $100 in taxes$180,000-$80,000=$100,000 AVhttps://www.realpropertyhonolulu.com/RPAD/documents/2008/08_txrate.pdfhttps://www.realpropertyhonolulu.com/portal/rpadcms/ExemptionInformation?parent=FORMS&tree=forums&li=einfo
24Town of Normal EgThe State of Illinois collects a sales tax at a rate of 7.5%, which is distributed as follows:5% to the State of Illinois0.25% to McLean County1.00% to the Town of Normal1.25% B-N home rule taxUsed for General Fund with a small % to support the Uptown Renewal Program.
25Compulsory Income Real property taxes Personal property taxes Sales taxesExcise taxIncome taxLocal option tax
26Compulsory Income Excise taxes Imposed on specific goods, services Hotel-Motel taxCVB’sSports facilities2% toward Spurs’ SBC ArenaGeorgia Dome (3.7%)Comiskey Park (2%)IL Sports Facilities Hotel Tax…Why do this?
27Illinois Sports Facilities Hotel Tax The Illinois Sports Facilities Authority imposes a tax on gross receipts from hotel operators within the City of Chicago. Receipts from permanent guests (occupants of 30 days or longer) are not taxed. Proceeds are used for the corporate purposes of the authority, including construction costs for the Comisky Baseball Park.
28Compulsory Income Excise taxes Car Rental tax Sin taxes American Airline Center in DallasAtlanta Hawks Philips ArenaSin taxesAlcohol, cigarettesCleveland’s Jacob’s field, Gund Arena & Browns Stadium
29Town of Normal Eg Tax % Supports Hotel & motel tax 12% 6% to the state; 2% to CVB; 4% city (Interstate Center & Uptown Normal)Food & Beverage (for immediate consumption)2%General fundLiquor tax4%PoliceUtility tax (ie. cable, gas, elec)5%General fund (one of largest revenue sources)Motor Fuel Tax??Collected by state to fund local roads
30Compulsory Income Real property taxes Personal property taxes Sales taxesExcise taxIncome taxLocal option tax
31Which is more fair, property or income tax? Compulsory IncomeIncome taxesMunicipal, state & federal levelsIL = 3% flat tax with 1/11 going to municipalitiesSuggested 4.5% - 50% increase$50,000 - $1500 to $2250 ($750 or $62 per month)IL = no state property taxes, rely on income taxesWhich is more fair, property or income tax?
32Compulsory Income Real property taxes Personal property taxes Sales taxesExcise taxIncome taxLocal option tax
33Compulsory Income Local option taxes Applied at the local level Legislatively enabled at the state levelIe. Local home rule sales tax added to the state sales tax (1.25% in B-N)
34Income Sources Compulsory Income Gratuitous Income Earned Income Investment IncomeContractual ReceiptsLeft off
35Gratuitous Income Received without expectation of return Grants, bequests, sponsorshipsMost often giver does not receive a direct benefit or compensation
36Gratuitous Income Grants LWCF – development of outdoor rec resources OSLAD - Open Space Land Acquisition and DevelopmentIllinois Transportation Enhancement Program
37Gratuitous Income Bequests Life insurance Wills ELM fund Sponsorships & Donations$$, land, equipment, stocks, bondsSee examples….
38Gratuitous Income Nonprofit agencies Public agencies Commercial Rely on gratuitousPublic agenciesRely on some forms of gratuitousGrants & the need for a foundationCommercialGives gratuitous income
39Income Sources Compulsory Income Gratuitous Income Earned Income Investment IncomeContractual ReceiptsLeft off
40Earned Income Cash resources generated from fees & charges Impacts all sectors
41Earned Income Entrance fees Well-defined but not necessarily enclosed areasBotanical gardens, zoosAdmission feesTo enter a building, structure, designated areaShow, performanceDiscuss fees & charges philosophy, see p 305
47Attingham Park – Heritage Lottery Fund Earned IncomeSpecial service feesHandling feesLottery fundsPSL - $ goes toward constructionAttingham Park – Heritage Lottery FundColorado Lottery
48Earned Income Special service fees Luxury suite ($100,000 per) Personal seat licenses per)Pay for right to buy season ticketsForfeit when you no longer buy season ticketsTransfer by gift, bequest or sale to third partyPSL - $ goes toward construction
49Income – IL State Parks Source Revenue Entrance Fees - Camping fees 5,863,987Cabins83,419Lodges175,831Concessions154,485Pools/beaches11,459Golf75,000State budget (0.092%)57,121,100Other sources:Motor fuel taxSnowmobile, ATV, boats, hunting license registrationTaxes on tobacco, sporting goodsSales tax on tourism
50Income Sources Compulsory Income Gratuitous Income Earned Income Investment IncomeContractual ReceiptsStart here
51Investment Income Invest unneeded revenue All sectors do this Stocks, mutual funds, money marketsAll sectors do thisNRPA earned $1,287,643 from investments = 10% of their overall budget ….Expand foundations
52Income Sources Compulsory Income Gratuitous Income Earned Income Investment IncomeContractual Receipts
53Contractual Receipts Revenue generated from contractual agreements ConcessionsGolf pro shopAll sectors use thisEg….
54Contractual Receipts Austin PARD $200,000 in revenue annually from contractsBarton Springs Food and Beverage in Zilker ParkCommission Paid– $90,000 annually ($7,500 per month) +8% of gross annual sales up to $265,000 and8.5% of gross annual sales exceeding $265,000
55Overview by Sector Market Sector None Minimal Major source Sector/ IncomeCompulsoryGratuitousEarnedInvestmentContractualMarket SectorNoneMinimalMajor sourceCan be a major sourceNPOLimited, based on available cashGrowing importancePublic SectorEssentialPg 48 McLean & Brayley