Mayor: Gurnee would be solid if not for loans

Gurnee Mayor Kristina Kovarik is voicing frustration about eight more years of loan repayments required for the police and public works buildings, and a park district pool.

If not for $1.4 million in annual loan payments for the projects, Kovarik contends, Gurnee wouldn't be in a financial pinch and day-to-day operations would be easily covered by the current sales, hotel, amusement and food and beverage taxes

Gurnee's mayor spoke this week during an overview of a tentative $47 million budget for the 2010-11 fiscal year starting May 1. Projections show the village's main income source - sales tax - will drop to $14.9 million, the lowest since the 2000-01 budget.

Sales tax revenue dipped by nearly $2 million over the past two years. On the table is a plan to boost a tax from 1 percent to 6 percent on wireless and landline telephone bills to collect an extra $650,000 to help fill a $1.1 million general fund deficit.

Gurnee has been funded mostly by sales tax for nearly 10 years.

Kovarik said the $1.4 million in annual loan repayments for the three projects will end in the 2018-19 budget year. She acknowledged a heavy dependence on discretionary consumer spending isn't the best way to fund major construction or employee pensions.

"We have to keep our commitment to not resort to a property tax," she added.

Loan repayments are required for Gurnee's $9.2 million police headquarters that opened in November 2003, along with a $4.4 million public works building that debuted in May 2001.

Village government also is obligated to provide $390,000 annually to the Gurnee Park District for a loan that paid for the $6 million Hunt Club Park Aquatic Complex. The park district is a separate taxing agency and opened the pool in 2002.

"These long-term fixed costs were not part of the discussion or contemplated when the property tax was eliminated," Kovarik said.

In September 2000, Kovarik was one of the village board trustees who approved a 0.5 percent municipal sales tax and dumped the property tax.

Kovarik and other trustees in December 2000 abided by an advisory referendum result and agreed to provide the parks with the pool cash. Richard Welton, mayor at the time, warned it would be dicey to commit money to another government.

David O'Brien was the lone dissenter in the 5-1 village board vote in favor of providing much of the aquatic center's funding. He said more than nine years ago sales tax revenue would slide in a declining economy.

Gurnee's proposed 2010-11 budget, which will go to a village board vote April 5, addresses the perils of sales tax dependence.

"During times of economic prosperity, elastic revenue increase," states the budget's executive overview. "However, the downturn in the economy over the past two years has dramatically impacted the village's main revenue source. The recession has changed consumer spending, perhaps permanently."