Learn about proposed Lake Zurich sales tax hike

Two special meetings are set to provide information to Lake Zurich residents about a proposed sales tax increase on the November ballot.

The meetings, hosted by the village board, are set for Sept. 8 at 7 p.m. at the Ela Area Public Library, 275 Mohawk Trail, and Sept. 16 at 7 p.m. at Sarah Adams School gym, 555 Old Mill Grove Road. Both venues are in Lake Zurich.

The meetings will include a presentation and general discussion on the proposed sales tax referendum on the Nov. 2 ballot, officials said.

"It's one of several meetings the village will have to inform the public about the information they need to know about the referendum," said Lake Zurich Finance Director Al Zochowski. "We are not telling people which way to vote, just passing on the information on why there is a referendum, and then they can make up their own minds."

Lake Zurich residents will decide whether to raise the village sales tax by half a percentage point to help fund capital improvement projects or provide property tax relief.

If approved, the tax hike would take effect July 1, 2011, and could generate as much as $2.2 million a year in additional revenue, Zochowski said.

The reason for the referendum, he said, is to fund street and capital improvements. The village is two years and $2 million behind schedule in street improvements and is likely to fall further behind without additional funding, he said.

The village currently has a 7 percent retail sales tax, but only 1 percent - $5.6 million annually - goes to Lake Zurich. The rest of the tax goes to county, regional or state governments.

Lake Zurich wants to make its portion 1.5 percent, worth about $7.6 million annually.

He estimated a person who typically spends about $10,000 a year on retail products in Lake Zurich will see their sales tax portion of their bill increase by $50 per year.

However, Zochowski said, every dollar Lake Zurich residents spend on the tax will be matched by nonresidents because half of the village's sales are from people out of town.

The sales tax is needed, officials said, because a 2.5 percent tax on gas and electricity - that generates about $500,000 annually - will expire in 2012.

Zochowski said, if the referendum isn't approved by voters, the board could extend the utility tax.