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Elburn voters must OK raising sales tax to pay police pensions, mayor says

Maybe, but voters must OK any increase

If Elburn wants to charge a higher sales tax to help pay for police pensions, it is going to have to ask voters for permission, President Dave Anderson told the village board Monday night.

Anderson said his research has indicated the village could ask for up to another penny on the dollar in sales tax for some items, and that it could phase in the increase in quarter-cent amounts.

Trustee Craig Swan had suggested in March that the village raise the sales tax to pay for the village's increasing police pension costs. The village and its police officers are both paying more, since the village was required to establish a police pension fund in 2011 and contribute to it out of the village's general fund.

It had to do so once the village grew to a population of 5,000. Before that, police officers were participants in the Illinois Municipal Retirement Fund like other village employees, and the village's portion of the pension contribution was paid out of a specific property tax.

"I thank most assuredly Trustee Swan because I think, in my mind, this is the way to go to help protect our police issue and some other things," Anderson said. " ... I would like the board to really think about it."

Sales tax money is funneled in to the general fund, so besides the pension, the money could be used to pay for other village expenses, Anderson said.

The village received $675,818 in sales taxes during fiscal year 2014. Details about how much came from the sale of food, how much from general merchandise and other nonfood items, and how much came from the sale of titled vehicles is not publicly available. The categories can be taxed at different rates.

Trustees had previously discussed whether raising the sales tax would put Elburn merchants at a competitive disadvantage to those in nearby towns.

Anderson said village officials should talk to the village's businesses before proceeding, to get a "buy-in" from them, even though they merely pass along the sales taxes from the consumer to the government.

The nonhome-rule sales tax, if approved, would not apply to food consumed off-premises, other than alcohol, soft drinks and food prepared for immediate consumption. It also would not apply to the sale of titled vehicles. And it would not apply to the sale of medicines or medical appliances. Nor would it apply to the sale of insulin, urine-testing materials, syringes and needles used by diabetics.

Anderson presented a chart that showed the sales tax in Elburn is 7 percent for general merchandise. Batavia, St. Charles and Sugar Grove charge 8 percent for general merchandise.

A breakdown of Elburn's 7 percent rate shows that 5 cents goes to the state, 1 cent goes to Elburn, a quarter-cent goes to Kane County and three-quarters of a cent goes to the Regional Transportation Authority.

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