Blank check fears about home rule unfounded, Lake Zurich leaders say

Whether Lake Zurich becomes a home-rule community could depend, in part, on how much voters trust their local officials.

Approval of home-rule status by voters Nov. 4 would give the village options for revenue from sources other than property taxes, such as a gasoline or sales taxes. But it also would exempt the village from property tax caps, although the village board over the summer voted to adhere to the cap even if given the power to exceed it.

"It's not a property tax money grab. That absolutely isn't what it's going to be." Mayor Tom Poynton said.

He said home rule would give the village flexibility and noted that nearby Palatine, a home-rule community, plans to decrease the village property tax levy for a fourth consecutive year.

Opponents, including the Libertyville-based Mainstreet Organization of Realtors, say the village promise regarding the tax cap can be changed by a current or future board.

The organization has sent two mailers urging Lake Zurich homeowners and taxpayers to vote against the measure as being the equivalent of giving local officials a blank check. Howard Handler, government affairs director for the Realtors group, said home rule often means more regulations, higher taxes and new charges, such as a $10,000 teardown fee in one suburb.

"Their argument is, 'Give us more power and we'll figure out the rest later,'" Handler said of village officials. "But home rule is simply too significant to roll the dice and hope for the best."

Tax cap laws limit increases in district property tax levies to 5 percent or the rate of inflation, whichever is lower. Approved in the early 1990s, tax caps were considered a remedy for skyrocketing property tax bills. This year, however, the effective rate of inflation is 1.7 percent.

Lake Zurich in any case would be exempt from the tax cap laws if it became a home-rule community.

Village officials say flexible revenue sources available with home rule would provide financial stability and help with various needs, such as an outstanding downtown redevelopment debt obligation, removal and replacement of ash trees, street resurfacing, and replacement of equipment and vehicles. Revenue available for those and other needs is limited, Poynton said, and the board has cut the budget, keeping expenses under control.

"There is a perception we're only (asking) people for a blank check, which is not true. I wouldn't vote for that myself," he said.

Village leaders say extra revenue also would temper unfunded state mandates or potential drops in revenue sharing and reduce the dependence on property taxes. And, they point out, voters can petition to revoke the designation.

But the same question was crushed by voters in 1998, and some individuals who campaigned against it then continue their fight.

"It doesn't matter which pocket it is. I am concerned about having my pockets picked," village activist Jim Tarbet said of a potential sales-tax increase.

Raising sales taxes could be one way to shift the tax burden to nonresidents who shop in the village, according to the village. Imposing a 0.25 percent home-rule sales tax would raise a projected $3 million per year. A penny-a-gallon gasoline tax would raise $150,000 per year, according to estimates.

Tarbet said added taxes could drive current customers elsewhere, "costing sales tax dollars and ultimately jobs, business losses and property taxes as the situation decays."

Poynton said he didn't think the village would be at a disadvantage if the sales tax increased.

Claudette J. Dyback, who has lived in Lake Zurich since 1949, said businesses and developers will pass any new taxes on to consumers. Dyback said the village, like homeowners, should live within a budget and cut any frills.

Village leaders say a financially secure government can enhance property values.

What revenue sources might be pursued and what would be done with the money has not been identified, but it would be discussed during a public process.

"We're trying to present as much information that we can, both pro and con," Poynton said.

For information, check www.lakezurich.org or the village Facebook page.