GLEN ELLYN – Village of Glen Ellyn officials have approved a proposal to increase the village's home-rule sales tax by 0.25 percent to make up for cuts in state revenues.
At their March 12 meeting, village trustees and Village President Diane McGinley voted 4-3 in favor of the measure on its second reading.
Currently, the village has a 1-percent home-rule sales tax. The increase will take effect July 1.
Voting "yes" were McGinley, along with trustees Gary Fasules, Craig Pryde and Bill Enright. Voting "no" were trustees Mark Senak, Pete Ladesic and John Kenwood.
Ladesic, who was against the proposed increase, wanted to table the issue.
"We have planned increases in retail sales tax coming in, with some of the [new] restaurants and other development," he said. "We should look at taxes as if and only if we need them."
He said trustees need to study the issue more.
"What I'm asking is for my fellow board members to join with me in tabling this until we can identify the need and maybe push this out until later in the year so we can kind of see what real risks and threats we have from the state," Ladesic said.
His motion to table the issue failed. McGinley was a proponent of the increase.
"While it does look like we have some healthy reserves in our bucket, we also have a plethora of unfunded and unscheduled projects – parking garages, streetscaping and such," she said. "And so for each time we delay something, we're leaving money on the table and it's only going to cost our residents more in the long run... We have too many things that we do not have money for. If we start taking money to plug state holes, that leaves us nothing to fund anything."
Kenwood disagreed, noting the village hasn't decided yet how much a parking garage and other projects would cost.
"Until we make those decisions, I don't feel in the short term, with our first year of deficit spending and multiple years of surplus spending, that we should react this way until we know what we would go to the community for in terms of taxes," Kenwood said.
McGinley said the village is looking at possibly building two parking garages, with each garage estimated to cost between $4 million and $10 million, and a downtown streetscape project could cost $10 million.
The home-rule sales tax, which is collected on nonresidents as well as residents, does not apply to groceries, auto sales or prescription and non-prescription drugs. Village officials project the increase would provide an additional $247,500 in operating revenue for fiscal year 2018, as only a half year will be collected.
As Glen Ellyn Finance Director Christina Coyle explained to trustees in a memo, because of cuts in revenue from the state and rising police pension contributions, the village's general fund budget for 2018 had a preliminary deficit of $848,214.
"The state of Illinois cut 10 percent of the village's income tax revenue, which funds 16 percent of the general fund budget," Coyle said. "This cut equates to $290,000 for fiscal year 2018. Also, the income tax revenue itself performed poorly at the end of 2016 and through 2017 due to tax law changes implemented by the state. At the end of 2017, income tax revenue generated only $2.5 million, erasing all positive gains in this revenue over the past five years."
In addition, she said the state also began charging a 2-percent fee to collect the home-rule sales tax, which equated to about $40,000.
"Lastly, the police pension annual contribution increased by $346,000 from fiscal year 2017 to fiscal year 2018," Coyle said.
She said there could be additional financial hardships on the village as well.
"In January 2018, the Illinois Municipal League published revised estimates for two main revenues in our general fund, the income tax and use tax," Coyle said in a previous memo. "Based upon these estimates, we could anticipate an additional negative hit to the general fund budget of $25,000."