State proposals could cost Elgin $18 million

Elgin officials say they're worried about the effect two proposed changes in state law could have on the city's revenue.

City council members on Wednesday took issue with a gambling expansion plan and a proposed sales tax change that they say could cost the city as much as $18 million a year in lost revenue.

The discussion was part of the council's first official look at a proposed 2008 budget, which it plans to vote on in December.

City officials had already said the slow housing market was going to put a dent in their available funds -- although they are still projecting an $8.5 million increase in revenue, or 9.8 percent, in the general funds over last year.

But the two proposals down in Springfield could change that, city officials said.

One policy proposal would change the way sales tax is distributed -- awarding cities where the purchased items are delivered, rather than where the business is located.

In other words, if you live in Elgin but buy a refrigerator in Algonquin and have it delivered, Elgin would receive your sales tax dollars.

Unfortunately, city officials say, that example would usually work the other way -- and Elgin could lose as much as $8 million a year, according to very rough estimates.

"It doesn't fare well for Elgin," said James Nowicki, city fiscal services director.

City officials say they could lose even more money if state lawmakers move forward on gambling expansion.

The city council passed a resolution Wednesday night opposing slot machines at Arlington Park.

City officials say they haven't run an official analysis, but they believe slot machines could cost the city as much as $5 million to $15 million a year because of lost businesses at the Grand Victoria Casino.

The council's resolution, however, does support additional casino licenses, provided the casinos are built in economically distressed areas, and outside the Grand Victoria's market.

"It wasn't our intention to pick on the state," Assistant City Manager Sean Stegall said. "But the reality is the actions they take have a drastic effect."

City council members will resume the budget discussion at their Nov. 28 meeting.