Does Your Commute Suck? Blame Kankakee

By JoshMogerman in News on Aug 27, 2011 8:00PM

The Regional Transit Authority and City of Chicago followed through on threats to sue a pair of northeastern Illinois towns accused of illegally siphoning off tax revenues. What? Financial funny business in Illinois? Yeah, not really a shocker, but the dollars involved are: the RTA is going to court to reclaim $100 million.

The City and RTA contend that Kankakee and Channahon courted major corporations doing business in Chicago with a kickback scheme that involved shaving 85% of the town’s share of tax dollars. In return, companies set up small offices in the towns where merchandise orders could be accepted (giving the remaining tax dollars to Kankakee and Channahon, rather than Chicago, where the merchandise was expected to be sold and those tax dollars would normally go).

We know that the typical Chicagoista isn’t exactly in the Crain’s Chicago Business target demo, so you may not have noticed that Greg Hinz has been all over this story since last spring. This week, he added some interesting context to the Trib’s splashy story last weekend, including this nugget showing just how lucrative the arrangement has been for the small towns:

“The scheme was so profitable that Kankakee and Channahon now lead the state in annual retail sales per capita at $78,000 and $62,000 respectively, the suit contends -- ten times the per capital sales of Chicago and roughly double that of towns with large retail shopping malls.”

He also has this not-so-veiled threat from a lawyer representing some of the companies embroiled in the mess that gives a taste of how ugly this could get:

“In fact, the companies involved (some of whom are members of the coalition) will not move to Cook County if they lose the suit, but instead flee the state entirely, [FACTS coalition attorney Stan] Kaminski says. "Obviously, this will also mean less jobs, property taxes, use taxes and other taxes and fees" for Illinois and its municipalities.”

Nice shaky economy you got there Chicago. It would be a shame if somebody did something to break it…

So, why should you care? Well, dear reader, do you take public transportation? Since the towns are just outside of RTA’s territory, this scheme diverts a massive chunk of change from the sales tax revenues that make up about half of the Authoirty’s subsidies to CTA, Metra and Pace. Think about that $100 million next time we hear about potential service cuts, fare increases or a lack of resources for transit infrastructure and new offerings like bus rapid transit in the City That Works.