The Batavia City Council is considering raising the city's sales tax rate to help pay for the electricity it buys.
The council will discuss the matter at its joint committees of the whole meeting at 7:30 p.m. Tuesday at the Batavia Government Center, 100 N. Island Ave.
According to a memo from city administrator Bill McGrath, raising the sales tax one-half cent per $1 spent would raise about $1.5 million annually. Raising the tax would still mean the city would have to increase electricity rates 10 percent this spring. Without the added sales tax, the staff is recommending a 16 percent rate hike.
If approved, the new sales tax would rise to 8 percent on general merchandise and 2.25 percent on food and drugs.
The electricity rate increases would cover the cost of buying electricity from the Northern Illinois Municipal Power Agency, to which Batavia, Geneva and Rochelle belong. The cost of electricity has increased due to NIMPA's investment in the Prairie State Energy Campus, a coal-fired plant in southwestern Illinois. NIMPA members are obligated to purchase certain amounts of the electricity the plant produces. The members also borrowed money to invest in the construction of the plant.
The problem is, electrical use has not increased, as was projected when the plant was planned, according to the city. And the cost of the electricity is higher than that of other suppliers, including ComEd. Batavia has been selling its excess electricity at a loss equal to 2.5 percent of its total power costs.
Tuesday night the council will discuss whether to pursue the sales tax idea at all. If so, it would further discuss the electrical rates Feb. 18, and the sales tax proposal at a special meeting Feb. 24. Comments from the public would be sought online and at the Feb. 24 meeting.
To have the sales tax increase in place by July 1, the council would have to vote on it in March and notify the Illinois Department of Revenue by April 1. The soonest the money would be seen is Oct. 1.
Otherwise, the state would not implement the tax until Jan. 1.
If the council increases the electricity rates, they would go in to effect May 1.
The council is also being asked to increase the flat residential service monthly charge by $4.