Village to defuse 'crisis' with utility tax
Additional $1 million in revenue expected
ANTIOCH -- Village officials will act on a proposed utility tax Monday, an action that will add about $12 monthly to a resident's phone, electric and natural gas bills.
Village Administrator James Keim made the case for a utility tax to the village board Wednesday night, explaining the village is having a "revenue crisis."
The tax on telephone service, both cell and land lines, will be 5 percent; on natural gas, 6 percent. The tax on electricity will be based on kilowatts. The average cost to a business will be about $47. The tax is projected to raise $1 million annually.
Eight months into the fiscal year, revenue is off by $770,000.
"We have done a good job in controlling expenses, but now we face a gap between revenues and expenses. We went through the budget line by line, identified savings and did identify some additional revenues. At end of day, after we cut or reduced by $513,000, we still wind up with a gap of about $300,000 that we need to close by the end of the fiscal year," Keim said.
"We either further cut or reduce expenditures, or we improve revenues. Our decision was to do a little of both," said Keim, a proposal that was met with Village Board support.
Keim said services and staff have already been cut to balance the budget, but not enough to offset the revenue shortfall. State revenues are down $200,000, sales tax is down $120,000 and revenue from development fees and permits is down by $1 million. Keim said costs, including insurance, fuel and utilities are up, and to meet expenses the village is tapping into its reserve funds, now almost non-existent.
"Without a cushion, we face some difficult times going forward," he said.
"I personally vowed not to approve a utility tax unless there was no other alternative. Now there is no alternative," said Mayor Lawrence Hanson, adding that for the majority of Lake County municipalities already have a utility tax.
"Thank goodness we do have this avenue to go down to raise additional revenue," said Trustee Mike Wolczyz. "Staff has done a terrific job keeping expenses down but I did not want to see us get this tight. I will support this. I really hope this will be a driving force to raise some reserves so staff doesn't have sleepless nights trying to figure out how to make ends meet."
The village had a short-term utility tax at the beginning of this decade to pay back funds moved illegally from the Dolly Spiering Memorial fund, set up to benefit the senior center. The tax was rescinded after the fund was repaid, but "it left us with a bad aftertaste," said Hanson. "We have to make the tax so transparent and so open to the public to avoid past problems. We will earmark the revenues and keep them separate."
Trustee Ted Poulos said a percentage of the revenue needs to go toward the reserve fund annually and it should not be touched. "I don't want my taxes to go up, but looking at the data and numbers, we have to do something at this point."
Keim said utility tax revenue will be used to build up a reserve fund and used for capital expenditures, including equipment and vehicles, infrastructure and projects. "We have $67 million in projects planned in our five-year capital improvement plan. This will give us a start," said Keim.
"Staff has done a good job of cleaning up a lot of issues and we made painful cuts. We have to run this like a business or we will fail. I will support this," said Trustee Dennis Crosby. "It is a terrible time to do this. But if it were not a terrible time we would not have to do this, and we would have other solutions. We must exercise extreme discipline with this money. I don't want us to turn into Chicago. We have to let people know that we will not take one penny of this and spend it on anything that is not essential."
