The city of Kankakee basically has enacted a tax swap by increasing its sales tax from 6.25 to 8.25 percent.
The hike, which goes into effect July 1, is designed to do two things. New money will be committed to funding public pensions, an urgent need. Property taxes also will be reduced, hopefully luring more homeowners into the city. That also is needed.
But a wrench was thrown into the works when the developer of the pending Ricky Rockets fuel center on the city’s east side said the sales tax would create a competitive disadvantage.
Illinois charges sales tax on gas. Thus, the sales tax is essentially a tax on a tax. Ricky Rockets says the sales tax increase equates to an additional 7 cents per gallon. If you are driving along Interstate 57 and see a price that is 7 cents higher than the last intersection, you probably keep on driving.
Compounding the dilemma is the critical location of Ricky Rockets. The intersection of I-57 and Court Street is a prime entry point into Kankakee, and for years, it has posed a problem.
Thirty years ago, there was a Kmart there. But it closed, and the empty building remained for years before finally being demolished. Now, an empty lot sits on the site.
An attractive entrance into a community invites potential homeowners to take a look. It also tempts businesses to locate there. Right now, it does neither.
Ricky Rockets estimates the higher sales tax would cost it an extra $336,000 annually. Yet the city and the company already have previous agreements in place regarding sharing sales taxes, as well as gaming tax revenues.
Are more economic incentives necessary? It might not make sense to undo what has been done, but one thing is certain: The location is vital, and the town’s leaders should consider other options to keep Ricky Rockets here.