Cook County businesses near the borders of other counties or Indiana could face a significant loss of sales as a result of the 1 percent increase in the county tax.

That tax hike—from 0.75 percent to 1.75 percent—already has engendered strong negative reactions from municipal officials and business leaders, especially from those near county or state lines.

In fact, one of the strongest reactions came in northwest suburban Palatine, where there was serious talk about working with other municipalities to secede from Cook County and form Lincoln County.

“I hope the last business person in Cook County will turn out the lights,” said David Vite, president and CEO of the Illinois Retail Merchants Association (IRMA), twisting a similar phrase that’s been used elsewhere to describe economic problems.

Indiana businesses will be selling a whole lot more products, the IRMA chief said, alluding to a prediction that many south suburbanites, and perhaps others, will shop at stores in northwest Indiana for at least their more expensive purchases.

Vite called the increase in taxes to more than 10 percent to be the tipping point that would push people to buy in locations outside Cook County.

Customers know how significant 10 per cent is, he noted, and the impact could be similar, he said, because two thirds of Illinois’s population lives within a 45 minute drive of Indiana or Wisconsin. The tax climate is one of the biggest variables when a business decides whether to locate or open in a certain place, according to IRMA.

If owners can not open a business at another location, the IRMA executive said he advised them to do everything they can to operate efficiently and “get their houses in order.”

Another area association executive also used strong language after the Cook County tax increase was passed as well as when it was being discussed.

Laurence Msall, president of the Civic Federation, said his organization was disappointed and concerned about the unrealistic and unnecessary tax increase in Cook County.

The amount is $200 million more than necessary, according to a report by the Federation, which is an independent, non-partisan government research organization that draws its membership from business and professional groups in the Chicago area. The increase to 10.25 percent is expected to add about $426 million annually and eliminate a $234 million deficit in a $3.2 billion budget for fiscal year 2008.

“It is inexcusable and irresponsible for a government that has a history of inefficiency, cost overruns and eye-popping mismanagement to demand millions of additional dollars from taxpayers when it has failed to implement rudimentary efficiencies and cost-saving measures,” Msall said prior to passage of the increase.

“We are fearful about the negative impacts on Cook County businesses, especially those near the border,” he said. “I have heard that Indiana business groups are touting their state as an alternative to paying high taxes in Cook County.”

Also of concern is that consumers will take much shorter trips into Lake, DuPage or Will counties. Local officials from municipalities and chambers of commerce noted that some trips are as short as across the street in border communities with businesses in two counties such as Burr Ridge.

Some local officials are so concerned that there is talk of some municipalities forming another county. The idea was mentioned by Councilman Jack Wagner from the village of Palatine in Cook County.

He noted that his mentioning the idea of forming Lincoln County with other nearby municipalities or possibly joining Lake County has turned into a firestorm. He pointed to legislation introduced recently by state officials to make it easier for municipalities to change their affiliation.

“We are customers of Cook County and we are stockholders of Cook County. We need an explanation from the administration there,” Wagner said. “In Palatine we have not raised taxes. We have tightened our belt. We have merged departments so there is one department head instead of three.”

Palatine Mayor Rita Mullins of Palatine was not hopeful about forming a new county, but she was concerned about the impact of higher Cook County taxes on economic development.

“I have seen this picture show several times before and it never went anywhere in previous years when it was proposed in reaction to other problems.”

But she added that the higher taxes are a serious problem affecting development.

“Who would want to come to Palatine with higher taxes from Cook County when people could locate businesses in Lake County?”

The Palatine Area Chamber of Commerce is also monitoring the tax situation.

“Of course we are concerned,” said executive director Mindy Phillips. “We are right on the cusp. Customers can choose to go to nearby businesses which do not have the Cook County tax.”

She said the Chamber has not done any research yet on the effects of the tax increase, but members are being kept updated.

“We have not been educated about the idea of a new county, so we have not taken a position on that possibility.”

Burr Ridge Mayor Gary Grasso called de-annexation another method, although an unlikely one since Cook County would have to approve a town’s departure while DuPage County, for example, would have to give its OK, as well.

He said the village attorney has taken a look at the possibility, so village officials could answer questions from people there.

“We would be asking the people who raised the taxes to let us out. The fox would not let the chickens out of the coop,” Grasso said. “I don’t think so. But if the state legislature changes the rules, I would like to take a look.”