Why Mt. Prospect may raise home-rule tax

Mount Prospect village board members will consider a quarter-percent increase in the home-rule sales tax to boost its fund for mid-level capital improvements.

At Tuesday's committee of the whole meeting, trustees considered the home-rule option, as well as the possibility of increasing property taxes.

Although the latter is still a possibility, trustees directed village staff to bring back an ordinance to increase the home-rule sales tax for discussion at Tuesday's board meeting.

In addition, at Mayor Irvana Wilks's suggestion, Finance Director David Erb will make a presentation on the impact of Trustee Paul Hoefert's suggestion that the village use some of the surplus generated in its general operating fund.

Mid-level capital improvements include such items as new squad cars, fire hoses and even financial software.

The village pays for them through its capital improvement fund. But that fund will be nearly depleted by the end of the year.

Village officials said $750,000 to $1 million is needed annually to maintain the fund.

The village's finance commission has recommended the home-rule sales tax option. Erb said the current home-rule rate is .75 percent. The village breaks that into three parts, one quarter dedicated to street improvements, another to flood control and another for the general operating fund.

Erb said an increase to 1 percent would bring Mount Prospect in line with neighboring communities.

He added, "The burden of the tax is not borne solely (by) residents. A lot of the retailers that we have here that generate sales tax are regional establishments. They draw customers from outside Mount Prospect."

In order for the increase to be effective by January, it must be filed with the Illinois Department of Revenue by Oct. 1.

Trustee Michael Zadel said he supports finding a permanent funding source, adding that in the past essential projects have been deferred. He said the need to maintain infrastructure was brought home by the recent events in Minnesota. "I'm not trying to use a scare tactic. I'm simply saying that there is an urgent need to stop deferring these projects, because it will cost all of us a whole lot more in the long run if we continue to do so."

But Trustee Paul Hoefert said the same arguments for raising the home rule sales tax -- that the tax would be shared by nonresidents and that other communities have done it -- have been used to justify past increases.

"I kind of look at this, as Trustee (Tim) Corcoran always says, as slicing the sausage in one slice at a time," he said. "We just keep adding to this and adding to it." In turn, he said, this sets off a chain reaction where communities are continually looking to match increases.

He said he would like to see whether the surplus generated by the general fund portion of the home-rule sales tax could be used instead to build up the capital improvement fund.

But Trustee Arlene Juracek warned that, although there is a $2.2 million surplus in the general fund, "That is something that took a number of years to build out. On an annual basis, the numbers are a lot smaller.

"We could squirrel this money away, and if we take it all and put it into the capital improvement fund, it's going to take us a number of years to build that up."