West Dundee mulls transfer tax
In an effort to erase part of a six-figure budget deficit this fiscal year, the West Dundee village board is considering a tax on residential and commercial property purchased in the village.
Trustees on Monday directed village staff to draft an ordinance that would include a referendum question on the November ballot that asks whether the village should introduce a real estate transfer tax to fill the $350,000 gap.
The tax, imposed on the buyers of property, would be set at $5 per every $1,000 of a property's value.
Village officials estimate the tax would bring in more than $200,000 annually.
In the first quarter of this budget year, the village has been unable to overcome the shortfall.
"We had a budget deficit to begin with," Village President Larry Keller said. "We were hoping some cash would come in from developers, but that has not happened. We need to try and cover our expenses."
Village officials have said general revenue for the fiscal year, which began May 1 and ends April 30, 2009, are expected to total just over $8 million.
However, expenses during the same period are projected at $8.4 million.
"We have not been able to plug the hole," Village Manager Joe Cavallaro said. "The need for financial resources has not changed."
While other revenue-generating options such as increased property taxes, food and beverage taxes and a fee for garbage collection were discussed, the board decided the real estate transfer tax was most "palatable" for residents.
"It is not an ongoing fee," Keller said. "It is a one-time fee for those coming into the community."
Unlike the other options, which the board could introduce without resident input, the transfer tax requires voter approval.
Village trustees will vote on whether to put the question on the November ballot at their Sept. 2 meeting. A public hearing also will be held that evening.
If the transfer tax is approved, Cavallaro said, the village would start collecting revenue Jan. 1.
"That would help us cover a portion of the deficit," Cavallaro said.