The big yellow “store closing” banners hanging from and leave no doubt that those retail operations are headed out of Deerfield.
While shoppers see their options dwindle when it comes to buying books or renting movies, the city faces the consequence of dwindling sales tax revenues for its coffers.
Those revenues figure into the city budget’s general fund, a revenue source that also includes property taxes, a share of income taxes, telecommunications and electric utility taxes, and building permit fees. When a part of that revenue stream declines, it negatively affects taxpayers who can be called upon to cover the gap, according to city officials.
But Robert Fialkowski, Deerfield’s director of finance, doesn’t expect the loss of Borders and Blockbuster to create a significant challenge for the city.
“It’s hard to pinpoint the effect” of the loss particular sales tax revenues for the city, Fialkowski said.
Complementary businesses will often pick up the customers of the store that is departing. For example, in Deerfield Square might likely see an uptick in business due to Borders' departure, Fialkowski said. While Borders did sell books, a taxable item, Blockbuster was primarily in the rental business, which didn’t bolster sales tax revenues.
All businesses file monthly taxable sales reports with the state, which then distributes a portion back to the cities. In Deerfield’s case, the amount was about 2 percent on eligible expenses.
There are no public records that break down the portion of sales tax revenues individual business contribute to a given city, Fialkowski said. But the effect is expected to be minimal enough not to impact his city budget draft for the May 2011-April 2012 year, he said.
Deerfield taxpayers of course would stand to benefit from continued economic growth and an improving general fund. Currently, the 2011-2012 budget draft projects a general fund deficit of about $500,000 that will result in a 2 percent increase in the city’s property tax levy. That forecast continues to contain uncertainties due to economic conditions, according to the document.
“We are hopeful that the recent positive signs in [the economy] will carry over, but any further negative shock to this economy would affect these estimates to their detriment,” the budget states.
Deerfield’s draft budget can be found at the village website at www.Deerfield.il.us under the finance department.
Any time a retail store closes in a primarily residential community like Deerfield, a negative effect will be felt, said Tom Healy, West Deerfield Township’s assessor.
His office is responsible for divvying up among property owners the tax burden created by budget expenditures. The closing of Borders and Blockbuster will not affect the property tax revenues as the owners of those properties will still pay those taxes despite the vacancies, Healy said.