Proposed sales tax worries some in Naperville business community
Some members of the Naperville business community say they would prefer the city fill some of its budget hole with property taxes rather than a new sales tax.
Business owners cited the impact of a sales tax on their ability to compete with establishments in other towns and suggested it wouldn't be the long-term solution the city needs for its budget woes. Some said a property tax increase is a better choice because it provides a write-off for residents on their income taxes.
They provided their input to City Manager Doug Krieger on Monday at a Naperville Area Chamber of Commerce legislative meeting.
The city is facing a $14.1 million budget shortfall next year. Krieger said the city plans to make significant cuts in expenses but those alone will not be enough.
Among city staff's recommendations to generate more revenue is a plan to implement a 0.5 percent sales tax while keeping the property tax rate flat.
Krieger acknowledged such a proposal wasn't likely to garner an enthusiastic response from the business crowd.
"It's something we have been able to avoid for a long, long time and something I think the city takes a lot of pride in not having," he said.
But he said it would generate $8 million a year and still keep Naperville's sales tax rate lower than comparable communities. He also has pointed out in city workshops that the tax would be paid in part by nonresidents.
Some business owners weren't convinced it is the right way to go. Jim Bergeron, owner of Jimmy's Grill and a member of the chamber's board of directors, said the city should look at property taxes because they can be a write-off. He doesn't feel a sales tax addresses the long-term situation Naperville is in as a community where growth has leveled off.
"Everything they're coming up with, whether it's sales tax or impact fees, is putting it on business, which is going to result in less jobs for people in the community and doesn't solve the problem long-term," he said.
Board member John Knobloch also said he wouldn't object to an increase in the property tax rate as one piece of the funding solution rather than implementing a sales tax.
"Imposing a sales tax is going to have an effect on driving some people to shop in Lisle, to shop in Bolingbrook," he said.
John Schmitt, the chamber's president and CEO, wants to know if the city can defer some of its projects and other expenses until times are better. He also wants to see a sunset clause on any new taxes.
Attorney Brand Bobosky also asked why Naperville can't dip into its reserves.
Krieger said those reserves would be tough to replenish and could lower the city's bond rating, which in turn would increase the interest rates it pays on its debt.
Another chamber member said she would be willing to pay a fee for services like brush collection but Krieger said the city wants to provide more than just core services.
"We do not want to reduce our service levels to make ourselves an average community," he said. "We need to stay above average ... but we need to do it in a fiscally responsible way."
The chamber will form a task force and give additional feedback to the city.
Most councilmen so far have expressed support for a sales tax and keeping the property tax rate flat, but they have not made any final decisions.
Naperville's $14.1 million hole includes a $5 million shortfall in general fund revenue, a $1 million cushion, $6.6 million for road maintenance and $1.5 million to cover the proposed elimination of the roadway impact fee.