Libertyville considers tax on restaurant food, drinks
Libertyville officials are considering taxing the source of what has made the downtown an increasingly popular destination.
A 1 percent "places for eating" tax would add a dime to a $10 restaurant tab, for example. It's a relatively small amount, but restaurateurs are wary they will become the feeding hands that are bitten by a village looking for new revenue.
According to the village, the tax is needed as a new, ongoing source of money to pay for items to benefit the restaurant industry, such as maintenance of downtown parking facilities, including a second parking deck about to be built. Streetscape improvements in commercial corridors and dining promotions are other possible funding options.
"It's probably more the perception than the actual dollar figure," said Brian Grano, owner of Mickey Finn's Brewery, a popular spot among what has become a cornucopia of restaurants along and near Milwaukee Avenue.
"Is there a sunset? Can we cap it? Usually taxes don't go down."
Answers will be forthcoming at a future meeting specifically on the topic. This week, the village board was to have discussed and presumably voted on an ordinance to enact the tax effective July 1, but it was deferred without debate.
"We got a lot of questions from the restaurants," Mayor Terry Weppler said after Tuesday's meeting. The upcoming session will "explain what it is and why it's needed," he added.
"We've got some pretty heavy bills coming up and because we're not home rule (population 25,000 or more) we're very limited in what we can do" to increase revenue, he added.
The 1 percent tax would apply to the sale of food or drinks prepared and sold for immediate consumption with seating provided on the premises, whether the food is eaten there or not.
Based on state sales tax figures for 2014, the new tax would generate about $700,000, according to the village's incoming Finance Director Patrice Sutton.
She said Gurnee, Lake Bluff, Waukegan, Highland Park, North Chicago, Wheeling and Buffalo Grove have similar 1 percent taxes.
During the past several years, the village has slashed staff and expenses and instituted utility taxes to weather the economic downtown.
As a result and because of a gradual improvement in the economy, the village is in the best financial state it has been in for some time, said Trustee Rich Moras, who chairs the village board's finance committee.
The committee in recent years has discussed various sources of new revenue. But property taxes are capped and don't keep pace with the cost of services, Moras said. That coupled with the threat of the state withholding income and/or sales taxes means the village needs to act sooner than later.
"Personally, I don't think a 1 percent tax will change anybody's behavior," he said. "We only have so many levers we can legally use, and this is one of them."
During an informal work session March 29, the board reached a consensus to pursue the tax. Moras said he wants to hear from business owners on the potential impact.
Grano, who is on the village's economic development commission, said some owners oppose the proposal but he is reserving judgment based on the potential benefit of how the funds are used. More than a dozen restaurants have opened in the past five years, but there is no organized group, per se.
"If anything is going to get everybody together, it might be this," Grano said.
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