How does the City fund road projects? Does the City gain from higher gas prices?
The City funds road projects primarily through 4 sources.
1) Local Option Sales Tax. The citizens of Sterling would likely have no idea how much this revenue stream has meant toward road construction. All of the money Sterling receives form the local option sales tax goes toward street projects. A portion goes to pay for the bond used to construct the last section of Lynn Boulevard, but the majority goes to pay for ongoing road projects. 2) Motor Fuel Tax. This is a tax that comes back to us from the State of Illinois. It has little to do with how much gas you buy in Sterling. The State collects the motor fuel tax on your gas purchases and then redistributes the tax to cities (and other local governments) based on population. In very round numbers, Sterling makes up 0.1% of the population in Illinois, so the City of Sterling gets back roughly 0.1% of gas taxes distributed to local governments. A small portion of Motor Fuel Tax funds are also used to pay for street lighting and traffic lighting, which would otherwise come from property taxes.
3) Federal Highway Funds. These are limited and aren't available every year. They are limited to FHWA eligible roads. For Sterling, Lynn Boulevard is eligible for FHWA funds and some older sections will be repaired in the future using FHWA funds.
4) Sales tax/property tax. Not a large part, but a significant part of the road spending. We use sales and property taxes to do a lot of the curb and gutter work on our own and to do some of the coring out of streets on our own which saves dollars for the City.
Does the City benefit from higher gas prices?
On the balance, no. The Motor Fuel Tax receipts are actually down right down. People are in fact driving less and as the Chicago area grows, the rest of Illinois becomes a smaller piece of the pie and therefore gets a smaller amount from the state in motor fuel tax since it's distributed based on your proportion of the population.
Yes, sales taxes are up slightly, but if people drive less and have less to spend elsewhere because they are buying fuel, it's not helping the City.
Worse yet, the City isn't immune. Fire trucks, police cars, street sweepers, backhoes, plow trucks, etc all run on gas and diesel that we have to pay for. Factor that in and the City really suffers from a budget standpoint. We'd much prefer and love to see $2 gas and people having more money to shop locally!
