East Dundee anticipates Wal-Mart departure, raises sales tax rate

East Dundee is increasing its home rule sales tax rate in anticipation of losing one of its largest sales tax generators.

This summer, Wal-Mart is relocating from its East Dundee store at 620 Dundee Ave. to a new Carpentersville location at the corner of Lake Marian Road and Kennedy Drive.

Village officials last week discussed alternative revenue sources that would offset the loss of tax dollars generated by Wal-Mart - roughly $850,000 per year, Village Administrator Bob Skurla said.

A sales tax hike, he said, is the most lucrative alternative funding option for the village and the least impactful on its residents.

On Monday, trustees voted 4-2 to increase the village's home rule sales tax by 0.5 percentage points to 2 percent for capital improvement projects - a move that is expected to put an additional $500,000 in the village's coffers each year, according to village documents.

The increase, which goes into effect July 1, brings East Dundee's overall sales tax rate to 9.75 percent.

Most sales tax revenues are not generated by East Dundee's 3,000 residents, Skurla said, but rather by the more than 10,000 people who visit the village during the day.

"I've always tried to recommend that if you are going to try and raise revenues, have it be spread to those who are using our services but aren't living here," Skurla said. "The home rule sales tax increase is probably the easiest way to do that with the least amount of impact on the residents here."

Trustees Allen Skillicorn and Alan Hall voted against the measure; Skillicorn said the tax hike makes the village "uncompetitive to our neighbors."

But Trustee Rob Gorman said the village needs the additional revenue to make up for Wal-Mart's departure, and this is the most feasible choice.

The village board earlier this month approved a measure to raise water and sewer rates, generating nearly $400,000 in additional revenue per year. Other options discussed last week included changing amusement tax regulations, adding a food and beverage tax and broadening the business development district.

"The home rule sales tax is probably the easiest, cleanest and least painful for our residents," Village President Lael Miller said.