St. Charles debates 2-cent gas tax to fund roadwork projects

St. Charles aldermen are mulling over whether a local gasoline tax is the best method for bridging a gap in the city's capital fund.

The proposed tax of 2 cents per gallon is intended to serve as a reliable revenue source designated for road construction and maintenance, Finance Director Chris Minick said.

Some officials view the tax as a necessary quick fix for balancing the budget next fiscal year, which begins May 1. If approved, the new funding source would be expected to plug a $212,000 hole in capital project funding that would otherwise be covered by reserves.

However, other aldermen believe the city first needs to create a comprehensive plan for generating more revenue in the long term. The gas tax, which likely would be implemented Nov. 1, could bring in between $425,000 and $500,000 per year, according to the city's rough estimates. Alderman Ron Silkaitis said he's concerned that won't be enough to offset growing expenses and declining state revenue in future years.

"I wouldn't mind doing more research, but we still need something that's going to cover the whole big picture down the road," he said.

Aldermen acting as the government operations committee voted 6-2 Monday to consider the proposal again in June. Staff members are expected to gather and present more information, including a comparison of other possible funding sources.

Aldermen Steve Gaugel and Maureen Lewis voted against moving discussions forward. Gaugel said he thinks the city should maximize its existing revenue sources before implementing a new tax.

The city council has discussed the possibility of raising its property tax levy, which has been frozen at about $12 million for the last nine years. "To me, it's one or the other," Gaugel said. "If this (gas tax) gets put in place, we need to make sure that what we put in place here covers what we need. I don't think we can do both."

Alderman Dan Stellato said he's unsure whether the gas tax is a sustainable funding solution, but it's a step in the right direction. "I just believe we need to start somewhere," he said.

The impact of the gas tax on users appears to be minimal compared to the importance of the road maintenance projects it would be funding, Alderman Rita Payleitner said. Customers who fill their vehicles with 20 gallons of gas per week would pay an extra 40 cents. That equates to an additional $20.80 per year.

Additionally, Minick said, many customers who visit St. Charles' nine fueling stations live outside the city, meaning the tax would be placed on both residents and nonresidents.

The gas tax is not included in the proposed 2018-19 budget, for which the city council held a public hearing Monday. Aside from utility rate increases, the budget draft does not include any other new taxes or tax increases for next fiscal year.