Buffalo Grove approves utility taxes as other tax revenue declines

Buffalo Grove trustees voted Monday to impose two new taxes, one based on residential use of electricity and another based on consumption of natural gas.

Village Manager William Brimm said that the tax is not generating extra revenue so much as it is replacing lost revenue from such traditional sources as sales and income taxes. The village needs to fill a $2 million hole in revenue. The anticipated revenue from the new utility taxes is estimated at nearly $1.9 million.

He also said the village will be charging a fixed rate based on consumption. The tax on natural gas would be five cents per therm. The tax on electricity would be 0.61 cents per kilowatt hour for the first 2,000 hours. The rate would fall to 0.40 cents over the next 48,000 and then gradually decline to 0.30 for use in excess of 20 million kilowatt hours. Transmission and delivery charges won't be taxed.

Finance Director Scott Anderson noted that the village is not adding new staffing, services or programs, but trying to get through 2010 with the same quality of services.

The vote came after a prolonged discussion during which trustees told the audience they had little choice.

"We are charged with a responsibility to provide a core level of service," said Trustee Jeffrey Berman. "Unfortunately that costs money."

Berman said the village has only three choices: adding to the property tax levy; diversifying the revenue stream through measures such as the new utility taxes; or "cutting where it really hurts," by taking police officers off the street, reducing fire personnel, or cutting back on road maintenance.

The board inserted a sunset provision that would require the board to re-examine the need to continue the taxes. They also exempted government bodies from paying the taxes.

All but two trustees voted in favor of both taxes.

Trustee Beverly Sussman said she initially intended to vote against both, but after considering the alternatives, decided to vote in favor of one tax, while voting against another to show her reluctance. Trustee Lisa Stone voted against both measures, citing the bad economy.

She said the village should look at steps such as reducing the village's contribution to the health insurance premiums of its employees. At present, the village's 234 employees pay 10 percent. Stone suggested it be raised to 20 percent.

But Brimm said the village is constrained by collective bargaining agreements.

Stone also suggested the village could go further in debt because the village's debt level was so low. Trustee Jeffrey Braiman had noted that the village's debt load of $6.5 million puts Buffalo Grove in a much more favorable position than, say, Wheeling, which has a level of $66 million, or Glenview, which has $141 million.

But other board members and Brimm, who served as finance director before becoming village manager, vigorously objected to borrowing money.

"Nobody wants to put another tax on, but if we don't do it, there are going to be some hard choices that are going to be made'" said Trustee DeAnn Glover. "To go into debt to run this village is just really crazy. We could end up like the State of Illinois. I believe in paying my bills."

One resident, Jim Lovejoy, a semiretired man, spoke against the new taxes.

"Eight dollars more a month for utilities is a big number," he said, noting that the village does not provide the gas and electricity service. "It would be like taxing air, and I guess that's next."