Libertyville sales taxes to go up after Jan. 1 to pay for municipal facility upgrades

Consumers in Libertyville will be paying a bit more for various products beginning Jan. 1 as a result of two special sales taxes enacted by village officials.

The non-home rule municipal retailers' occupation tax and municipal service occupation taxes are each set at 0.5%. Together, they are expected to generate about $1.6 million annually with proceeds used solely to improve municipal facilities.

Since Illinois doesn't have a single legal definition for sales tax, these two categories can collectively be considered a local sales tax, according to Nick Mostardo, finance director.

That means everything subject to regular state sales tax will be subject to the local taxes. Exceptions are titled personal property such as cars and boats as well as qualifying food, drugs and medical appliances.

The retailers' tax applies to tangible goods without an underlying service, such as buying a hammer at a hardware store, Mostardo said. The occupation tax is applied to goods associated with a service but not the service itself, such as the oil filter used during an oil change, he added.

Because of the distinction, eligible sales will be subject to one or the other tax but never to both at the same time. The new tax will add 50 cents to an eligible $100 sale.

Village officials say establishing a dedicated source of funding for needed projects was imperative, but the enacted amounts were less than allowed.

"People are tapped. We did not want to ask for any more than we needed," said Mayor Donna Johnson. "We knew what we needed to do but we didn't want to do too much," she added.

Those needs were outlined in a facilities analysis commissioned by the village and completed in February.

The Schertz municipal building, which houses the police and community development departments and other functions at 200 E. Cook Ave., was determined not to be providing modern needs.

The situation imposes challenges regarding security, processing, storage, training and future technology integration, according to Trustee Matt Hickey, who chairs the village's finance committee.

Johnson said the investment is overdue.

"The priority is the police station. It's not up to par at all in terms of a competitive marketplace," she said.

Whether the police station or other facilities are renovated or new facilities built is to be determined.

Enacting the local sales taxes sets the table for the village to borrow money by issuing bonds and applying the proceeds to debt payments. The village also plans to use cash reserves for some of the cost.

Hickey said the new tax amounts are "the minimum percentage necessary to make these needed critical investments in our first responders and government."

The new taxes will bring Libertyville to an 8.5% sales tax rate, about the middle of the pack, he added.

"We needed to take the minimal amount of (sales) tax to make this work and the minimal amount to keep our businesses competitive," he said.