This is STAR as in Sales Tax Anticipated Revenue bonds, and it’s a plan only big developers and pocketed or ill-informed legislators could love. I’ll put links to other articles after the jump so you can further clarify for yourself exactly how STAR financing works, but if you understand Tax Increment Financing (TIF) — and how TIF is regularly abused in Illinois — you’ve already got the concept. Just add the twist of developers capturing, via rebate, sales tax revenues generated within the district.
STAR is beginning to
infect catch on across the country. The Illinois intro to it is SB1909, the STAR Bonds Financing Act, which establishes a 900-acre business park in Glen Carbon. SB1909 has passed both houses of the General Assembly. Heaven help us if Governor Quinn signs it. This bill represents the polar opposite of government’s obligations to facilitate a level playing field. It does, however, facilitate Illinois’ slide into bankruptcy. According to two state departments, the immediate impact to the state budget will be as follows:
Fiscal Note (Dept. of Revenue)
SB 1909, as engrossed, would have a negative impact on State government revenue from the Retailers’ Occupation Tax, Use Tax, Service Occupation Tax, Electricity Excise Tax, Gas Revenue Tax, and Hotel Operators’ Occupation Tax. The combined annual loss to these revenue sources could exceed $15 million annually per established district given the terms of the proposal and depending on the location of the district. Much of this loss will be due to the erosion of the State government tax base that existed before the STAR district was created.
Balanced Budget Note (Office of Management and Budget)
SB 1909, as engrossed, would cost the State $15,000,000 in lost sales tax revenue as estimated by the Department of Revenue. SB 1909, if enacted into law would add $15,000,000 in additional spending pressure to the General Revenue Fund and to the current Fiscal Year 2009 budget deficit.
Rich Miller at The Capitol Fax Blog calls it the “Worst. Bill. Ever.”
Once this thing starts, it’ll never stop. Guaranteed. It won’t be long before a very large chunk of this state is in a STAR bond district, meaning that state sales tax money will be spent on local projects, meaning that the state’s budget situation will only get worse while the locals try to cannibalize each other. Mark my words.