Tax on new residents could help village's financial woes

A proposed tax on new residents could help bump West Dundee's 2008-2009 budget into the black.

Village board members Monday night discussed options to generate hundreds of thousands of dollars in revenue as early budget discussions have indicated a shortfall of almost $350,000 in next year's general fund balance.

The village's projected general fund expenditures amount to $8.4 million, while anticipated revenues total $8.1 million, said Village Manager Joe Cavallaro.

Adding to the potential shortfall is an anticipated drop in year-end sales tax receipts.

This year, the village expects to rake in about $2.91 million.

That number is expected to fall to $2.86 million next year.

To overcome the deficit, village officials are mulling a real-estate transfer tax imposed on buyers of residential and commercial property in the village.

The tax, which would be set at a rate of $5 per $1,000 of the property's value, would generate more than $200,000 annually.

Cavallaro called the figure conservative since staff did not include commercial property purchases.

If the tax had been instituted prior to the 2006 sale of Spring Hill Fashion Corner at the intersection of routes 31 and 72, the village could have pulled in $850,000, village staff said.

Existing residents and property owners who sell one property and then buy another within the village are exempt.

"We need to improve the general fund revenue in order to fund the services that residents have become accustomed to and that the board desires to provide," Cavallaro said.

A real-estate transfer tax would require resident approval by referendum on the November ballot.

Village President Larry Keller said a real-estate transfer tax would help the village diversify its revenue sources as the village has traditionally relied heavily upon property tax and sales tax revenues.

Trustees said they would support the tax that some coin an "entrance tax."

"We have made some big investments in recent years and it would make sense to have new residents pay for that," Trustee Tom Price said.