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posted: 10/19/2013 8:00 AM

Hoffman Estates board voting Monday on four new taxes, one new fee

Hoffman Estates residents would pay about $100 more per year

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If four proposed new taxes and one proposed new fee are passed at Monday's village board meeting, Hoffman Estates residents can expect to pay around $100 more to the village per year.

Village officials say the proposed new sources of revenue are necessary to pay for the village's backlogged roadwork and capital improvement projects and replace aging equipment.

Before the economic downturn, general fund revenue was the primary funding source for the street improvement program and other capital needs. But for the past several years, the village has been paying for road improvements with only the $1.2 million it gets annually from motor fuel taxes.

The cost of needed street improvements is $41.8 million -- $26.9 million for reconstruction and $14.9 million for resurfacing, officials say.

In the next five years, the village wants to address $24.6 million of the road improvement need, including $16.3 million in reconstruction and $8.3 million in resurfacing work.

That equates to 50 street segments getting reconstructed -- including parts of Bode Road, Glen Lake Road and Volid Drive -- and 76 segments getting resurfaced.

To do so, however, the village needs to dedicate $4 million to $5 million per year to street improvements.

Village Manager Jim Norris said he believes the village hasn't implemented a new tax in about a decade. Through the recession, Hoffman Estates eliminated the equivalent of more than 60 full-time employees and cut millions of dollars in spending from the operating budget.

"We have kept those things cut from the budget even though the economy has started to rebound," he said.

Norris said the village staff looked carefully at every revenue option available and considered taxes that neighboring communities already have that Hoffman Estates doesn't.

"We very quickly decided we were not going to look at property taxes," he said. About 12 percent of residents' property tax bills goes to the village.

The staff is recommending the village board not raise existing taxes -- food and beverage, hotel and real estate transfers -- in order to stay competitive with neighboring communities.

New revenues that are under consideration are:

• Utility tax on electricity: The most significant new revenue source, expected to raise $1.9 million annually, about 65 percent from businesses. Residential bills would increase on average about $3.35 per month.

• Utility tax on natural gas: The village staff is recommending the tax be applied per therm, which would result in about $1 million for the village annually. At 5 cents per therm, a resident's monthly gas bill is expected to increase on average by about $3.21.

• Municipal motor fuel tax: Would bring in about $500,000 annually by adding .025 cents of tax to each gallon of fuel bought. Most of the village's gas stations are on major state or county roads, so the tax would be paid by both residents and thousands of nonresidents. Someone who buys 600 gallons of gas in Hoffman Estates a year would pay $15 extra.

• Package liquor tax: The village's 2 percent food and beverage tax is imposed not only on food and poured beverages in restaurants, but also packaged liquor sold in retail stores. This new liquor tax would raise the tax to 5 percent on packaged liquor only -- with 3 percent going toward capital equipment and projects. It will produce an estimated $200,000 to $250,000 per year.

• Stormwater utility fee: Estimated to generate $450,000 to $475,000 per year, the staff is recommending a three-tiered monthly fee for residential lots depending on lot size. The average lot (7,500-12,500 square feet) would be charged $2 a month. Smaller lots would be charged $1.50 per month, and lots larger than 12,500 square feet would pay $2.50 a month. The village plans to do individual calculations for nonresidential properties.

Revenue from the stormwater utility fee would be dedicated to repairing, replacing and maintaining the village's stormwater system.

About $3 million of the more than $3.6 million that would come in from the four new taxes would be added to the current motor fuel tax funds, resulting in a $4.2 million annual road improvement program.

The remainder would go toward equipment like snow plows, squad cars and fire apparatus, or projects like public building improvements, emergency weather equipment and IT hardware.

Norris said the average total cost of all the new taxes per residence is still less than the savings 98 percent of residences got from participating in the municipal electricity aggregation program that went into effect late last year.

If passed, the new taxes will go into effect Nov. 1. The stormwater utility fee would go into effect March 1, 2014.

The board is mostly in favor of the new taxes and fee. Anna Newell was the only trustee to express complete disapproval when the new revenues were introduced to the village board last Monday.

The village board meeting begins at 7 p.m. on Monday, Oct. 21, in the village hall council chambers.

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