(The Center Square) – A new tax set to be imposed will soon make hotel rooms in Springfield the second-most taxed in the state, behind the city of Chicago.
Debate over the new tax saw economic development pit against a burden the tax could place on the local hotel industry.
A new 3% hotel tax passed by the Sangamon County Board on Tuesday is planned to fund an expansion of the publicly owned Bank of Springfield Center, which the county hopes to break ground on in the fall of 2027.
The expansion would cost $60 million and add additional square footage and features to draw more conventions and events to the city.
The tax’s passing means the combined tax on a hotel room in Springfield, including state tax, will rise to 16.64%, the second highest in the state behind Chicago.
Hotel industry advocates both locally and statewide opposed the board passing the tax without looking further into the impact the tax might have.
Board member Tony DelGiorno, representing part of Springfield, spoke in favor of the resolution Tuesday, noting he thought anything to improve the downtown was better than inaction.
“Try to improve our lives and the lives of our children and give them opportunities. Construction jobs, educational opportunities, a new tax base so that our property taxes can actually be, I don’t know, lowered a little bit,” DelGiorno said. “So I call upon all of my colleagues here to think about the future.”
Construction trades groups and unions also expressed support for the tax increase due to the major development that would result.
Caitlin Rydinsky, area director of sales for Ambridge Hospitality, argued the tax could have a reverse impact from what’s intended.
“If the goal is to increase occupancy, raising taxes on visitors that does the opposite, the idea that a new 3% tax is not going to support what you’re looking for in the Midwest market. Springfield is not Chicago,” Rydinsky said.
Rydinsky noted the new tax rate would be high compared to major metropolitan areas around the country.
“But we don’t look at just Illinois with this 3% tax. We are the highest among the entire nation. Chicago, 17.64%, Houston 17%, San Francisco 16%, Anaheim 15%, New York 14% plus additional fees,” Rydinsky said. “Are we competing against those markets?”
The new tax comes as the Illinois House didn’t take up a bill in the final hours of the spring legislative session from Sen. Doris Turner, D-Springfield, that would create a Capital Area Tourism Authority.
The authority would assist in financing the expansion project, alongside a new hotel at the cost of roughly $140 million.
If the General Assembly passes Turner’s bill before the county takes on debt for the project that would require the extra tax income, the county’s resolution allows the tax to be lowered or eliminated.
Turner told The Center Square after the spring session her legislation would be beneficial for the city if passed this fall.
“The legislation that I have pending, as well as the development of the Y-block, is definitely an investment in downtown Springfield that has the possibility of bringing dividends over and over and over again,” Turner said, referring to state plans to build a new $4 million park downtown.
The state and county are also renovating the county courthouse complex and connecting it to a new intermodal transportation station just across the street from the BOS center.
Turner’s bill would need a concurrence vote in November to be sent to the governor’s desk.
