Referendum defeat leaves Itasca worried about funding
Itasca officials asked voters for additional financial flexibility to pursue capital projects.
Voters last week told them no.
A referendum to give the village home-rule powers — which, in part, would give the flexibility officials sought — was defeated by a margin of 893 to 704.
In the wake of that defeat, officials say they’re going to have to rethink some of their plans to improve the village’s infrastructure.
“We will still do capital projects like fixing our streets, bridges and public properties,” Village Administrator Evan Teich. “This was about being able to do more.”
Becoming a home-rule community would have allowed Itasca to keep its sales tax rate at 7.75 percent — below all neighboring communities — but still collect more revenue since more items would be eligible for taxation.
Home rule also would have allowed the village to access about $980,000 in annual hotel tax revenues. Under state statute, that money now can be used only for tourism-generating events like festivals.
Had the measure had passed, Teich said, the additional funds could have been used for infrastructure improvements.
Itasca leaders put the home-rule question on the ballot after a committee of citizens and business leaders recommended doing so. The idea was prompted partly because Itasca’s largest revenue source, sales tax, has dropped from $7.2 to $4.4 million per year because of the recession. Leaders say the current sales tax trend is flat.
Itasca’s general reserve has dropped to $2.5 million. Leaders say it ought to be about $6 million, enough to cover six months of expenses.
As a result, the village has cut programs and services, including its $1.5 million annual road improvement program. The village instead is spending about $560,000 a year on road overlays and milling.
Village President Jeff Pruyn said that while the proposed budget for the next fiscal year is balanced, Itasca must re-evaluate its 5-year capital improvement plan annually.
“We knew it was kind of a long shot,” Pruyn said of the home rule referendum. “Now the question is how much of our 5-year capital plan can we get done going forward.”
To help deal with the financial crunch, the village is looking to collaborate with local hotels, which combined have roughly 1,100 rooms, to generate more revenues from sales taxes, food and beverage taxes, utility, water and sewer taxes. Itasca also recently joined both the DuPage and Woodfield convention and visitors bureaus.
“A full hotel room benefits the community,” Teich said.
Itasca’s other concern about the home-rule loss stems from Illinois’ budget woes. The state is four months late on distributing the village’s share of property taxes. Teich said leaders worry, too, because “they are always talking about lowering payments (to municipalities).”
“If Illinois continues to look at balancing their $12 billion deficit on this revenue, what does the village do?” he asked. “And when Illinois raised the income tax 66 percent, they didn’t raise the portion we receive 66 percent. Our share remained the same. So we are just going to have to be mindful of finances, as we always would have been.”