Buffalo Grove looking seriously at utility tax

Buffalo Grove could be tapping into a new revenue source that hits home.

The village is considering a tax on utilities that would go into effect Jan. 1.

Village Manager William Brimm said the tax could add around $4 per month to the average gas bill and between $3.75 and $3.80 to the average electric bill, based on data provided by area utility companies.

The new revenue would replenish village coffers with around $1.8 million, which village officials say is necessary to make up for a shortfall in revenue, such as income and sales taxes.

Brimm mentioned the proposal when presenting the 2010 budget to the village board this week.

During his presentation, Brimm used the term "the new normal." The term sums up the village's approach to the budget during tough economic times.

For Buffalo Grove, which depends heavily on a variety of taxes to fund a budget of greater than $60 million, the new normal has meant a significant loss of income; the sales tax revenue that has long been the village's bread and butter.

Brimm said sales tax revenue, which peaked at around $12 million in 2006, has shrunk to an expected $7.5 million by the end of the year.

Brimm was careful to point out that the purpose of the utility tax would not be revenue enhancement but a replacement for lost revenue.

"Even with the replacement, we don't get back to the levels that we saw (in previous years)," he added.

Village President Elliott Hartstein said Buffalo Grove has resisted a utility tax for years, even as other suburbs were implementing theirs.

Hartstein stressed the village is dusting off the proposal only because of dire financial circumstances.