Alcoholic beverage tax worries Elgin business owners

With a handful of new taxes set to take effect this year, some small business owners in Elgin are bracing for the backlash from one in particular — a 3-percent alcoholic beverage tax.

The owners of the Martini Room, Elgin Public House and Douglas Street Sports Bar spoke out at the city council's final meeting to discuss the 2012 budget but made no headway. The new tax, approved unanimously by council members, will take effect July 1.

J. Michael Ross, owner of Douglas Street Sports Bar, said the new tax would be devastating for his business and might make him re-evaluate staying in Elgin.

“It's costing more and more money to do business in Elgin,” Ross said. “There is only so much you can take. And there is only so much you can pass on to your clientele.”

Ross and other business owners encouraged council members to pass a lower food and beverage tax instead and spread the pain among more businesses.

But City Manager Sean Stegall pointed out at the Dec. 21 budget hearing that the fact the tax affects fewer people is a major point in its favor.

Councilman John Prigge cast the lone “no” vote on several parts of the proposed budget but said he approved the alcoholic beverage tax for several reasons.

“We have to look for new streams of revenue and (the alcoholic beverage tax) was tempered by the fact that we are going to reduce the liquor license fees by about 56 percent next year,” Prigge said.

Prigge said he also wants to develop a plan to reward business owners for good behavior in their bars and restaurants by offering even lower fees in 2012.

Business owners are not sure that will be enough.

Ursula Borodzinska, owner of Martini Room, pointed to lower taxes in surrounding communities like Algonquin and Geneva as well as more choices for bar and restaurant patrons. Borodzinska, Elgin Public House owner Greg Shannon and Ross said it would be hard to pass on the tax to customers, all citing already high prices in the opinions of patrons.

“I'm already struggling to get the regulars that I have,” Ross said. “If we pass the tax onto them, it just gives them one more reason not to come out.”

An electricity tax, natural gas tax and sales tax increase also will take effect in Elgin this year, along with a refuse fee and surcharge for leaf collection.