More than two-and-a-half years after the sale of cannabis for recreational use became legal in Evanston, local cannabis tax revenue continues to fall far short of expectations.
And that means the City Council’s hope that the new sin tax would provide a painless source of revenue to fund the city’s racial reparations program at a pace of $1 million a year for a decade is coming up far short.
So far the city has approved 16 grants of $25,000 each to persons who qualified as residents who lived in the city between the development starting in 1919 of its first zoning code and the passage of a fair housing ordinance in 1969 under what’s called the restorative housing program within the reparations fund.
But 138 additional residents have qualified as eligible for those grants and as many as 470 more people may be eligible as current residents who are descendants of persons who lived in the city during those years.
The City Council previously allocated $400,000 to restorative housing. Monday it is scheduled to vote to allocate another $3,450,000 towards that program.
That would be enough to take care of the remaining 138 so-called “ancestors” — who themselves lived in the city before 1970.
But the money would only be available to distribute to them as revenue from the cannabis tax came in.
It was initially imagined that the housing program would be only one of several forms that reparations would take, but the funding shortfall is throwing the development of other programs into doubt.
Because of a state law that bars disclosure of sales tax data that could reveal the performance of individual businesses — and because there’s still only one cannabis dispensary in the city — city officials have been extremely reluctant to say how much revenue the cannabis tax is generating.
So a staff memo prepared for Monday’s City Council meeting only says the tax could support “disbursement of funds to approximately another five to sixteen ancestors in the coming months.”
Two years ago then Ald. Ann Rainey (8th) said a consultant to the dispensary had told her sales were running at a rate that would yield $600,000 in revenue per year.
But the city’s Comprehensive Annual Financial Report for 2021 appears to indicate that the tax generated only $275,000 last year. That left the reparations fund with an ending balance of just under $506,000.
After spending $101,000 from the fund so far this year on the first reparations payments and other expenses, the city’s June 30 financial report says the fund had a balance of $408,000.
That won’t leave much left over once all 16 of the initial recipients have received their assistance.
Earlier this year Ald. Devon Reid (8th) proposed transferring $5 million from the city’s general fund surplus to the reparations fund.
But Corporation Counsel Nicholas Cummings said using money from the general fund — a fund designated for mandatory spending — on a discretionary program like reparations for which eligibility is limited by race — could violate the equal protection clause of the US Constitution, putting the legality of the reparations program at risk.