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updated: 3/13/2014 12:07 PM

Libertyville officials say utility taxes still needed for budget uncertainties

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Two utility taxes imposed by Libertyville officials during the recession have been extended another year, although residents will get a break on one of them.

While trustees said they are more comfortable with the village's financial situation, which includes a modest surplus, revenue from the taxes is still needed to fund potential expenses, the board determined.

As a result, a 6 percent telecommunications tax will continue. An electric tax also will remain in force, though trustees agreed to cut the village's take from 5 percent to 4.5 percent. The percentage drop will amount to between $150,000 and $200,000 less revenue for the village.

With the reduction, the electric tax is expected to raise about $1.3 million, while the telecom tax will generate about $1.57 million.

The rationale for keeping the taxes was hashed out in previous budget talks so there was little comment Tuesday during the board votes.

But trustees Donna Johnson and Drew Cullum disagreed with the electric tax cut, saying the move was premature as the village still needs the revenue.

"I don't think we're ready to peel that back. There's a lot of unknowns out there," Cullum said.

Expenses associated with the harsh winter weather, and the village's to-be-determined but substantial commitment to the Brainerd building -- for back rent or as a portion of demolition costs -- were examples.

"We have no idea, with Brainerd, what our liability will be," Johnson said. She said she agreed with the directive to revisit the utility taxes every year to assess whether there is an opportunity to modify them. But this isn't the year for that, she contended, as the board has to balance tax reductions with the ability to maintain and provide services.

"I don't think it's a good idea. The surplus is not that deep. That's my concern," she said.

Decreasing sales tax and other revenues led the board in September 2009 to take what were described as temporary measures by enacting taxes on natural gas and electric use and increasing the telecommunications tax. The taxes came with a sunset provision that is revisited annually.

As conditions improved, the natural gas tax was reduced twice before being eliminated last year. The others have remained and were scheduled to expire April 30.

"We've been true to what we've said. We've been taking baby steps," said Trustee Rich Moras, chairman of the board's finance committee.

Since the taxes were enacted, sales tax, licenses, permits and other revenues have increased, expenditures have been reduced and a reserve fund has been rebuilt.

At the moment, the proposed surplus in the general fund, which pays for day-to-day expenses, is $572,300 but will change as budget adjustments are made, finance director Pat Wesolowski said.

The new budget year begins May 1. The village continues to recover from the economic downturn but challenges remain, according to the proposed budget document.

Those include: an increase in the Libertyville Sports Complex subsidy from $530,000 to $906,000; state legislation that could reduce funding sources; potential requirements to increase the funding level of police and fire pensions; potential added expenses for the Brainerd building; and tree removal to combat the emerald ash borer.


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