Elgin considers added taxes
Elgin officials have known for years the time would come when new revenues would have to bolster the budget. As the city council struggles to close a projected deficit that could reach $13 million, it is clear to many the time is now.
The proposed budget presented by City Manager Sean Stegall last week includes cutting $4.8 million more in expenses, adding a new garbage fee and implementing a higher tax rate that would maintain consistent revenue for the city even with declining property values.
But he also gave council members a list of other taxes that could be implemented — like surrounding communities already do.
According to an Elgin survey of 28 municipalities, there are six other tax options Elgin has yet to propose: a food and beverage tax, a real estate transfer fee, a natural gas tax, an electricity tax, a vehicle license fee and a gasoline tax.
Des Plaines, Arlington Heights, Aurora, Buffalo Grove, Elk Grove, Rolling Meadows, Waukegan and Wheaton are some of the communities that tax in nine or more of 11 categories. The average community surveyed uses eight different taxes.
Elgin’s revenues, unlike any other surveyed municipality, come from just four: sales tax, telecommunications tax, hotel/motel tax and property tax, whose rate has been frozen at $1.92 per $100 of assessed value.
For all 11 taxes or fees except the real estate transfer fee, the average has increased since 2005 across the surveyed communities. None of Elgin’s taxes have increased in that time.
“While the policy discussions relating to our budget are very complicated, the math is very simple,” Stegall said Friday.
The city has steadily cut expenses since 2007 — the proposed budget in 2012 is 17 percent lower than it was five years ago — but last year’s costs still exceeded revenue. Officials chose to dip into reserves instead of cutting further or raising taxes.
Stegall argued the city needs more revenue and in a more diversified format.
“We postponed as long as we could have, getting to this point,” Stegall told council members.
Mayor David Kaptain pointed out a previous council recommended keeping property taxes at less than 35 percent of the city’s total revenues. A lower reliance means a smaller effect when property values plummet.
Stegall’s proposed budget keeps property taxes at almost 44 percent of revenues, something council members might decide to change.
Kaptain said the budget decisions this year were like taking off a Band-Aid — the council could decide to make a flurry of changes at once or get away from the property tax reliance in slower stages.
“I think there’s somewhere in the middle here that’s a compromise position,” Kaptain said.
The council will discuss the general and riverboat funds in detail starting at 2 p.m. Wednesday in the Heritage Ballroom of The Centre, 100 Symphony Way. An interactive public meeting will be held from 9 a.m. to noon Saturday in the same location.