Libertyville gets sales tax boost

A simple change in business practices will help recharge Libertyville's sagging sales tax revenue.

By moving billing operations to a sales office established in the village last year, Addison-based Brook Electrical Distribution Company will pare the amount of sales tax customers pay by 1 percent.

The shift also is expected to produce an infusion of nearly $400,000 in annual sales tax for Libertyville, which has seen revenue from that source plummet with car sales.

"It's a great shot in the arm. Hopefully they'll be able to put some things back (in the budget) that were put on hold," said Jeff Harger, whose last day as mayor was Tuesday.

Harger, who runs a lightning protection company and uses Brook as a supplier, pitched the idea of lower sales tax here as an alternative to some type of incentive.

"When I buy from Brook, I pay 8 percent sales tax. I said, 'I can't give you any money but if you move your business here, now your sales tax is 7 percent,'" he said.

Brook, which sells electrical products mainly to large commercial contractors, had been based in Lincolnshire but moved last year to a much larger facility in Addison. To maintain its Lake County presence, the company opened a sales office in Libertyville.

Moving its billing to Libertyville is expected to save customers hundreds of thousands of dollars. That move became effective May 1.

"It enables us to be competitive in our market," said Dan Dobski, director of marketing. "Quite a few competitors have been doing the same thing for years. They would find a tax rate that's lower and if they had a facility in that area, they would move their (billing) operations there."

Addison Village Manager Joe Block said the village had not been notified.

Harger said the move made sense for Brook because it represents a break for customers during a rough economic time. Libertyville also doesn't have the cash to provide incentives.

"You're not getting free money but you're getting the sale of the product," he said.

Brook has been in business for 80 years. It was acquired in 2000 by Sonepar USA, which operates 12 companies with 253 branches in the U.S.

The company was "bursting at the seams," in Lincolnshire, Dobski said, and the move to Addison more than doubled its space to 175,000 square feet. Sales have been "flat to down," he added.

Any sales tax increase is welcome in Libertyville, as that revenue source has been declining from a peak of $8 million in 2001. Total sales tax for 2008-09 was budgeted at more than $7 million, but actual receipts fell short at about $6.2 million. The budget for 2009-10 is about $6 million.

"Even if we pick up the $390,000, we still don't know how much we'll lose from the auto (dealers)," Harger said.