Beginning April 1, Cook County businesses were required to collect an additional one percent in sales tax from their customers. The new tax was authorized by county voters last November and is intended to be used for local projects. The current sales tax rate in Cook County is 7.875 percent.

Until the projects are ready to be funded, county auditor Braidy Powers says the sales tax revenues are placed in a fund originally established for the previous county sales tax, used to pay for hospital improvements, that expired in 2007. Businesses pay the sales tax they collect to the state, which then makes a monthly payment to the county, less an administrative fee. The first monthly installment will arrive at the end of May.

Cook County has about $100 million annually in retail and service economic activity, which means the sales tax is projected to generate about $1 million per year. In the short term, it is possible collections will be less than projected because of the nationwide recession.

“The recession is the wild card,” says Powers. “We saw a drop in lodging tax revenues (a separate tax used to fund tourism promotion), but that doesn’t necessarily jibe with retail activity.”

The state legislation creating the county sales tax sunsets the tax at the later of 20 years or when the county determines it has collected enough to pay off bonds and other obligations for funding the projects. The legislation limits county collections to $20 million plus the cost to issue the bonds and interest payments.

Powers says now would be a good time to purchase bonds due to low interest rates. However, the projects must be ready before the bonds are issued.