Everyone impacted when auto dealers close

By Mike Garrity

KSDK -- Local car dealerships closing means you could see cuts in city or state government services, because local governments especially are dependent on tax dollars from dealerships.

Take O'Fallon, Illinois for example.

With the down economy the city has already been forced to make a $1.5 million worth of cuts, lay off one employee, and to not fill nine city positions, including one police officer position.

But now, add Auffenberg Chrysler to the mix.

Even though the owner says he's still fighting it, Auffenberg has been told by Chrysler it is being closed.

But last year, O'Fallon's city administrator says O'Fallon got $340,000 in sales tax revenue from Auffenberg Chrysler. That's equal to about four or five police officer positions he says.

So now, without that revenue, the city of O'Fallon could be forced to make more cuts.

"Fifty percent of our general fund budget comes from sales tax," says O'Fallon, Illinois City Administrator Walter Denton.
"So we're highly dependent on sales tax, so everything from police services, to street repair, and all of our general services that we provide here are from sales tax."

"If you breakdown a 34 or 35 million dollar number (the number Auffenberg claimed in 2008 sales) the sales tax on that is six and a half percent, so one percent of that goes to the City of O'Fallon, five percent to the State of Illinois, a half percent probably to St. Clair County, " explains James Auffenberg, Jr., Owner of Auffenberg Chrysler.

And that's just one example.

Consider the affect across the country, as each U.S. car dealership reportedly averages $16.5 million a year just in state and local taxes, advertising expenditures, and charitable contributions (see link to stateline.org below).

As of Friday, locally, we know at least 10 Chrysler dealers will likely be closing in the St. Louis area, but at this point there's still no official word on how many local GM dealers will be closing.

State officials in both Illinois and Missouri say it is too soon to tell how much they'll be impacted.

Here's a link to a related article: http://www.opposingviews.com/articles/opinion-car-dealer-closings-will-add-to-state-budget-woes