Elk Grove imposes new electric utility tax

Starting next year, Elk Grove Village residents and businesses will begin seeing a new electric utility tax on their bills, but how much they pay all depends on how much they use.

The village board voted unanimously Tuesday night to impose the new municipal electric use tax, the proceeds of which will be earmarked for the village’s growing pension obligation for its employees.

Mayor Craig Johnson said the tax would likely cost the average homeowner $3 per month, though it would likely have the largest impact on businesses in the village’s industrial park that use the most electricity.

Electric usage will be taxed starting Jan. 1, and residents and businesses will likely start paying the new tax on their bills in March, officials said.

The tax is calculated on a 10-tier scale, with various rates established for the amount of electricity consumed per month.

For the first 2,000 kilowatt-hours used, the tax is 0.61 cents per kilowatt-hour. For the next 48,000 kilowatt-hours used, it’s 0.40 cents per kilowatt-hour.

The rate progressively decreases in the remaining eight tiers until it reaches 0.30 cents per kilowatt-hour.

Johnson said he and the village board decided to adopt an electricity tax — as opposed to taxes on gasoline, natural gas or phones — because taxpayers would be able to minimize its impact by monitoring their electric usage and by joining electricity aggregation programs.

Village officials estimate the new tax will generate $4 million a year. They hope it will be able to close a $60 million local pension funding shortfall in 15 years.

If the local pensions are indeed fully funded by that time, Johnson said it would be up to the village board whether the tax stays or goes.

The village manages three pension funds for some 300 village employees, including police, firefighters/paramedics, and public works and administrative staff.

All three of the village’s pension funds were fully funded in 2000. But as of last year, the pensions were about 63 percent funded.

Johnson has blamed state lawmakers for the village’s increasing pension liability due to “unfunded mandates,” such as reducing the number of years to receive a pension from 35 to 30.