advertisement

'Places for eating' tax likely coming to Libertyville

Looking for new revenue but wary of seeking voter approval for a tax increase, Libertyville officials informally have opted to proceed with a "places for eating tax" that would add a bit more to the cost of every sit-down food and beverage bill.

If the law is enacted, likely in a few months, patrons will pay an extra 1 percent - or 20 cents more for a $20 steak, for example. Libertyville would join several other communities, including neighboring Gurnee and Vernon Hills, in imposing a charge above the normal sales tax.

Village officials contend the extra cost is small enough to be absorbed without complaint by those who frequent Libertyville's lively and growing restaurant scene, including out-of-town visitors. They don't think a nominal increase will drive diners elsewhere.

"Since the surrounding communities already all have a higher tax rate than Libertyville, I do not think it will be a detriment to our restaurants," Mayor Terry Weppler said.

The tax is regarded as the least onerous of few options available to the village without voter approval. Because Libertyville is not a home-rule community, utility, amusement or places for eating taxes are its options. Utility taxes are regarded as nondiscretionary and to be considered only for financial emergencies. They also would have a greater and more direct impact on businesses versus the "pass through" tax, board members say. And without enough eligible amusements to raise a substantial amount, the places for eating tax became the choice.

"It's one of the few levers we can use. Let's try it," Trustee Scott Adams said last week during a board discussion of the tax.

"I just don't like the fact of going through referendum ... people take more offense to that," he added.

Officials said the amount of the tax should be capped at 1 percent and a sunset clause added to the final version. The availability of electronic filing with the village and an exemption for private companies that contract food services with other local taxing districts are other conditions.

The decision caps months of research, discussion and consideration of other possibilities - such as installing parking meters - to raise more money for general expenses, including maintenance of facilities.

An informational meeting for business owners was held, and about a dozen attended a general board discussion in May. Besides pro and con views, questions involving logistics, such as who would collect the tax and how, were raised. The proposal appears to be short of generating organized opposition.

After several lean years that included employee cuts, Libertyville has emerged from the economic downturn and has a small surplus. Pension obligations and the uncertainty over state funding are among the reasons the village wants to find new revenue sources for general expenses and to prepare for future deficits.

The pending expiration of a special financing district, which has been used to pay for streetscape and parking improvements downtown, is another factor in the decision. The 1 percent tax is expected to generate about $700,000.

Weppler stressed the money would be used for general purposes.

"We've said all along the tax is not just for downtown," he said.

A return to parking meters, which were removed in the late 1980s in an effort to improve downtown, was rejected as creating more problems than benefits.

Officials briefly discussed expanding the general sales tax to businesses besides restaurants. Although a 1 percent boost there would raise $1.6 million, it would require board approval by Aug. 22 to appear on the November ballot.

"If (residents) vote it down, where are we?" said Trustee Donna Johnson. "You have to consider (if) strategically that's the route you want to take."

Trustees informally agreed 5-1 to proceed with the places for eating tax. Only Trustee Todd Gaines favored a referendum to raise the general sales tax.

"I would prefer that," he said. "I like the idea of not asking a particular industry or business."

With 13 tables, the Green Room restaurant is among the smallest of the 22 restaurants in the downtown area. Owner Dan Temesy estimated the new tax would amount to $20 to $30 per month, which he would personally absorb.

"We'll grin and bear it," he said. "We decided we won't increase our prices because we don't have to."

Village officials hinted they may eventually have to consider other options for Libertyville's financial health.

"Do this for a year, see how it works," Pizzeria DeVille owner John Durning said. "But get it teed up for what's probably coming down the road."

@dhmickzawislak

  A 1 percent "places for eating tax" in Libertyville is being considered as a way to help pay for general expenses, such as parking garage maintenance. Steve Lundy/slundy@dailyherald.com
  Jennifer Hutson, left, and her daughter, Megan, of Wauconda eat ice cream in downtown Libertyville. Village officials informally have agreed to proceed with a 1 percent "places for eating tax" as a way to increase revenue to pay for general expenses. Steve Lundy/slundy@dailyherald.com
Article Comments
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the "flag" link in the lower-right corner of the comment box. To find our more, read our FAQ.