DIXON – Sen. Dick Durbin says that as he has campaigned throughout the state, communities big and small have brought one business issue to the forefront.
"I'm hearing at every level of business that they are getting killed by online retail," Durbin said. "It's the biggest issue affecting municipalities because of the lost sales tax."
The Springfield Democrat was at the Dixon Chamber of Commerce on Friday to listen to the concerns of about 20 local business and government leaders. A three-term senator and majority whip, Durbin is being challenged by GOP State Sen. Jim Oberweis of Sugar Grove.
Durbin said the Main Street Fairness Act he co-sponsored in 2011 would help Main Street retailers compete with online merchants and bring uncollected sales taxes back to the cities. The bill would require online retailers to collect each state's sales tax on behalf of the consumer. A little-known law requires consumers to self-report on their state income taxes, but only a small percentage comply.
The bill passed in the Senate a year and a half ago before it stalled in the House. It is again picking up momentum, thanks largely to dire budgetary challenges faced by local governments.
"It passed with 70 votes in the Senate, and the House wouldn't even call it for a vote," Durbin said. "The reason was that the word 'tax' was in it. The truth, however, is that this is an existing tax, not a new one."
Durbin and other Democratic leaders have worked to link the Main Street bill with a 10-year extension of the Internet Tax Freedom Act, which prohibits states from levying taxes on Internet access. The access law is set to expire on Nov. 1.
"I hope to move these two together," Durbin said, “because I think that both can really help you at the local level."
The legislation is a long-running response to a 1992 landmark Supreme Court decision, Quill Corp. v. North Dakota. The decision established that a business must have a physical presence in a state in order to collect sales taxes. The court ruling left the door open by saying that Congress could overrule the decision through legislation.
Switching to economic development, Durbin asked for input from leaders.
"I'm here to listen rather than tell you I came here with a solution," Durbin said.
Rochelle Economic Development Director Jason Anderson raised the sensitive political question of congressional earmarks, a discontinued practice of allowing members of the U.S. House and Senate to fund local projects with federal money.
"With earmarks gone, we've lost the ability to funnel transportation funds to rural communities," Anderson said. "How do we get the money for badly needed infrastructure projects?"
Earlier this week at an Illinois Farm Bureau-sponsored forum in Bloomington, Durbin spoke in favor of earmarks, saying "they have had a positive impact." Oberweis has said he is staunchly opposed to bringing back the practice of targeting specific projects for funding.
"When we had earmarks, it was much easier to pass a highway bill," Durbin said. "Much of the motivation was gone once we lost the grip-and-grin photo opportunities."
Durbin said the federal gasoline tax, which funds much of the nation's infrastructure work, has taken a hit from decreased fuel use by consumers.
Geoff Vanderlin, executive director of the Lee County Council on Aging, said transit funding had also dried up at a time when local demand for services was skyrocketing. The Council on Aging is a grant-funded transportation provider for the county.
"We've had the same amount of funding for the last 7 years," Vanderlin said, “and ridership has gone up 120 percent over the last 5 years."
Durbin said the funding mechanism for transportation needs to change, but it is a delicate political issue.
"The federal gas tax is regressive," he said. "The question becomes, How do we spare lower-income people from from shouldering a huge portion of the load for highway dollars?"