1. Revenue Sources
Chapter 8

2. Income Sources Compulsory Income Gratuitous Income Earned Income
Investment Income
Contractual Receipts

3. Compulsory Income Secured by government organizations
Collected through taxing & regulatory powers at different government levels
Why do commercial agencies care??
Types of taxes…??
KNR 370 – Discuss mills

4. Compulsory Income Real property tax Personal property tax Sales tax
Excise tax
Income tax
Local option tax

5. How is an individual’s property taxes determined?
Question…
How is an individual’s property taxes determined?

6. Compulsory Income Real property taxes
Land & whatever is developed or growing on the land
Different rates for different levels
Personal home, business, undeveloped land, farm
96% of property taxes stay locally

7. Compulsory Income Real property taxes
Understand assessed value, tax abatement, tax base
Value defined by a realtor/appraiser/tax assessor
Fair market value
Assessed value – 30-50% lower than FMV (1/3 in IL)
A.V=Taxable worth

8. Fair market value = $180,000 listing
Assessed Value = $60,000 ($180,000 / 3)

9. Compulsory Income Real property taxes Tax abatement
Exemption from paying taxes
Specific time period
New business incentive

10. Compulsory Income Real property taxes Tax base
Total assessed property value of all taxable property in a community
Bloomington vs. Hudson
Exemptions – NPOs, churches, universities, museums….

11. Compulsory Income Real property taxes Tax rates formula
Tax rate = Required taxes / net assessed valuation
Required taxes = * Set from budget (ie. $5,000,000)
* Expenditures – revenues (excluding taxes)
* Where does a city get revenue?

12. Compulsory Income Real property taxes Tax rates formula
Tax rate = Required taxes / net assessed valuation
Net assessed valuation=
Total assessed valuation of com. 410,500,000
Tax exempt property (abatements) - 10,500,000
Net assessed valuation $400,000,000
Total assessed valuation of the community

13. Compulsory 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

14. Compulsory Income Real property taxes Tax rates formula
AV: $100,000 home x = $1,250 tax bill
AV: $150,000 home x = $1,875 tax bill
Total assessed valuation of the community

15. Town of Normal Eg Taxing Body Tax Rate % of Total
60,000 AV; 180,000 FMV
Town of Normal
10.0%
$449
Normal Library
4.5%
$203
McLean County
12.1%
$541
Township
2.0%
$89
Road & Bridge
1.1%
$49
Water Reclamation District
2.1%
$95
Airport Authority
1.4%
$65
Unit 5 School District
60.7%
$2,720
Community College
6.0%
$267
Total
100.0%
$4,477

16. FYI…
Monday – meet in ITDC 103B
Read one of the linked articles

17. Compulsory Income Real property taxes Personal property taxes
Sales taxes
Excise tax
Income tax
Local option tax

18. Compulsory Income Personal Property taxes
Allowed in 41 states (not IL)
1. Household tangible property
Autos, $, livestock, furniture
2. Business tangible property
Inventory, business fixtures, furniture, equip
3. Intangibles
Stocks & bonds

19. Town of Normal Eg 0.75% Use tax on titled items
cars, boats, motorcycles
Supports General fund

20. Compulsory Income Real property taxes Personal property taxes
Sales taxes
Excise tax
Income tax
Local option tax

21. Compulsory Income Sales taxes Largest source of state tax revenue
Second largest for cities
Imposed on the sale of tangible goods
At-home food & drugs exempt
DE, MT, NH, OR – no sales tax
Range 4-10%
1-2% stays with local government

22. Compulsory Income Sales taxes Dedicated sales tax
MO State Parks (1/10 of ea. Cent)
Have no entrance fees
Used to fund Bank One Ballpark & renovate Packer Stadium
Rural towns vs. tourism towns
Boulder, CO & Wal-Mart
Normal vs. Honolulu…

23. Tourism Town Comparisons
Normal, IL
Honolulu County
Tax rates
$7.46/$100 AV
$0.33/$100 AV
Taxes paid on AV $60,000
$4,476
$197.40
HA property tax on same home*
$7490
$329
Honolulu County gives $80,000 credit to FMV. Rest is taxed.
Must pay a minimum of $100 in taxes
$180,000-$80,000=$100,000 AV

24. Town of Normal Eg
The State of Illinois collects a sales tax at a rate of 7.5%, which is distributed as follows:
5% to the State of Illinois
0.25% to McLean County
1.00% to the Town of Normal
1.25% B-N home rule tax
Used for General Fund with a small % to support the Uptown Renewal Program.

25. Compulsory Income Real property taxes Personal property taxes
Sales taxes
Excise tax
Income tax
Local option tax

26. Compulsory Income Excise taxes Imposed on specific goods, services
Hotel-Motel tax
CVB’s
Sports facilities
2% toward Spurs’ SBC Arena
Georgia Dome (3.7%)
Comiskey Park (2%)
IL Sports Facilities Hotel Tax…
Why do this?

27. Illinois 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.

28. Compulsory Income Excise taxes Car Rental tax Sin taxes
American Airline Center in Dallas
Atlanta Hawks Philips Arena
Sin taxes
Alcohol, cigarettes
Cleveland’s Jacob’s field, Gund Arena & Browns Stadium

29. Town 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 fund
Liquor tax 4%
Police
Utility tax (ie. cable, gas, elec) 5%
General fund (one of largest revenue sources)
Motor Fuel Tax ??
Collected by state to fund local roads

30. Compulsory Income Real property taxes Personal property taxes
Sales taxes
Excise tax
Income tax
Local option tax

31. Which is more fair, property or income tax?
Compulsory Income
Income taxes
Municipal, state & federal levels
IL = 3% flat tax with 1/11 going to municipalities
Suggested 4.5% - 50% increase
$50,000 - $1500 to $2250 ($750 or $62 per month)
IL = no state property taxes, rely on income taxes
Which is more fair, property or income tax?

32. Compulsory Income Real property taxes Personal property taxes
Sales taxes
Excise tax
Income tax
Local option tax

33. Compulsory Income Local option taxes Applied at the local level
Legislatively enabled at the state level
Ie. Local home rule sales tax added to the state sales tax (1.25% in B-N)

34. Income Sources Compulsory Income Gratuitous Income Earned Income
Investment Income
Contractual Receipts
Left off

35. Gratuitous Income Received without expectation of return
Grants, bequests, sponsorships
Most often giver does not receive a direct benefit or compensation

36. Gratuitous Income Grants LWCF – development of outdoor rec resources
OSLAD - Open Space Land Acquisition and Development
Illinois Transportation Enhancement Program

37. Gratuitous Income Bequests Life insurance Wills ELM fund
Sponsorships & Donations
$$, land, equipment, stocks, bonds
See examples….

38. Gratuitous Income Nonprofit agencies Public agencies Commercial
Rely on gratuitous
Public agencies
Rely on some forms of gratuitous
Grants & the need for a foundation
Commercial
Gives gratuitous income

39. Income Sources Compulsory Income Gratuitous Income Earned Income
Investment Income
Contractual Receipts
Left off

40. Earned Income Cash resources generated from fees & charges
Impacts all sectors

41. Earned Income Entrance fees
Well-defined but not necessarily enclosed areas
Botanical gardens, zoos
Admission fees
To enter a building, structure, designated area
Show, performance
Discuss fees & charges philosophy, see p 305

42. Earned Income
Rental fees
Pavilions, equipment

43. Earned Income
User fees
Activity fees
Showmobile user fees…

44. User Fees Eg. Michigan DNR generated:
$24.9 million in camping revenues
$12.2million in gate receipts.
Accounts for almost 96% of their total revenue of $38.6 million
(NASPD, 2008)

45. Earned Income
Sales
Goods & services through pro shops, concessions, etc. Eg
Kentucky State Parks restaurants - $14.4 m/year
Tennessee – $8.5 m/year

46. Earned Income
License & permit fees
Boat permits, snowmobile license,

47. Attingham Park – Heritage Lottery Fund
Earned Income
Special service fees
Handling fees
Lottery funds
PSL - $ goes toward construction
Attingham Park – Heritage Lottery Fund
Colorado Lottery

48. Earned Income Special service fees Luxury suite ($100,000 per)
Personal seat licenses per)
Pay for right to buy season tickets
Forfeit when you no longer buy season tickets
Transfer by gift, bequest or sale to third party
PSL - $ goes toward construction

49. Income – IL State Parks Source Revenue Entrance Fees - Camping fees
5,863,987
Cabins
83,419
Lodges
175,831
Concessions
154,485
Pools/beaches
11,459
Golf
75,000
State budget (0.092%)
57,121,100
Other sources:
Motor fuel tax
Snowmobile, ATV, boats, hunting license registration
Taxes on tobacco, sporting goods
Sales tax on tourism

50. Income Sources Compulsory Income Gratuitous Income Earned Income
Investment Income
Contractual Receipts
Start here

51. Investment Income Invest unneeded revenue All sectors do this
Stocks, mutual funds, money markets
All sectors do this
NRPA earned $1,287,643 from investments = 10% of their overall budget ….
Expand foundations

52. Income Sources Compulsory Income Gratuitous Income Earned Income
Investment Income
Contractual Receipts

53. Contractual Receipts Revenue generated from contractual agreements
Concessions
Golf pro shop
All sectors use this
Eg….

54. Contractual Receipts Austin PARD
$200,000 in revenue annually from contracts
Barton Springs Food and Beverage in Zilker Park
Commission Paid– $90,000 annually ($7,500 per month) +
8% of gross annual sales up to $265,000 and
8.5% of gross annual sales exceeding $265,000

55. Overview by Sector Market Sector None Minimal Major source
Sector/ Income
Compulsory
Gratuitous
Earned
Investment
Contractual
Market Sector
None
Minimal
Major source
Can be a major source
NPO
Limited, based on available cash
Growing importance
Public Sector
Essential
Pg 48 McLean & Brayley