Increased tax could result in $300,000 for Geneva

Geneva residents and businesses will likely pay more taxes on telecommunications service in 2010.

The Geneva City Council, meeting as a committee of the whole, voted 9-0 this week to raise the telecommunications tax from its current 4.5 percent to 6 percent, the maximum allowed by state law.

It expects to bring in $300,000 more to the city's general fund. Currently, it collects about $1 million from the tax, which is levied on landline and wireless service providers, including telephones, paging services, radio communications and more. There's a federal moratorium on local taxes on Internet access until Nov. 1, 2014.

The move is being made as the city faces even less revenue from state income tax than it budgeted for in the 2009-10 fiscal year, which began May 1. City officials said that while they cut 20 percent in expenditures in the general fund overall, and budgeted for no increase in income tax, income tax receipts were 25 percent less than expected through July 31.

Earlier this year, firefighters agreed to forego their raises. Managers aren't receiving raises, the annual employee-and-volunteer appreciation dinner has been cut, tuition reimbursement was eliminated, and nonunion nonmanagement employees may only get raises of up to 2 percent.

"In order to be fiscally responsible we need to look at the other side of the equation (revenue) as well," city administrator Mary McKittrick said.

"One thing that I did not read in the newspapers that I think is a very important part of this discussion is that we have cut costs," Alderman Craig Maladra said.

Resident John Devine asked the council to consider only raising the tax to 5 percent, arguing that even this relatively small increase hurts when other taxing bodies are raising taxes and fees. But Alderman Dawn Vogelsberg said she thought it would be an inefficient use of staff time to raise the tax one-half percent and then have them come back "every six months" to make a case for raising it again.

"It seems like a minimal impact (on a bill)," she said.

The city needs to let the Illinois Department of Revenue know by Sept. 20 if it is raising the tax, in order for it to take effect Jan. 1. The council is scheduled to vote on the matter Monday.

The staff memo about the proposed increase can be read in the committee of the whole agenda packet on the city's Web site at geneva.il.us/agendas/cowpacket.pdf.