Glen Ellyn mulls sales tax increase

With the prospect of a looming budget deficit and layoffs, Glen Ellyn Village Manager Steve Jones is proposing an increase in the municipal sales tax.

The 1 percentage point shift - from 7.25 percent to 8.25 percent - would generate from $1.7 million to $1.9 million a year. It would not include automobile sales, groceries or pharmaceuticals.

It would produce less revenue in fiscal 2009-10, however, because it wouldn't be implemented until Oct. 1.

Even with it in effect for just seven months of the fiscal year, though, the tax would more than cover the village's projected $400,000 deficit for 2009-2010 and ensure budgets for the next two or three years are stable, according to village officials.

Finance Director Jon Batek said revenues are down 7 percent compared to last year. The bigger issue, though, is the hit to pension funds that all villages are dealing with that will take years to pay back.

By the end of this fiscal year in April, the village will be anywhere from $500,000 to $600,00 in the red even though expenses are on track. Money to cover the deficit will come from reserves, but Batek said that's not an option for 2009-2010.

Jones said staff already has cut expenses to reduce what initially was projected as a $2.6 million deficit.

"We've made some pretty heinous cuts," he said.

Those include deferred items, such as money put away for vehicle replacement and funds for the forestry program.

Batek said the village eventually will have to replace those aging vehicles.

Several vacant positions also have not been filled.

"These are not solutions; these are reactions to the current problems," he said. "It's so far beyond just making up $400,000."

Jones said the staff has looked at how many of the village's 110 full-time employees it will be able to do without. Even with a sales tax increase, some employees likely will have to be let go, but most of those duties will be covered by shifting responsibilities.

Without a tax increase, the number of layoffs will be larger and will directly affect services, he said.

Jones said the sales tax in neighboring Wheaton and Lombard already is at 8.25 percent, so officials believe Glen Ellyn businesses will stay competitive.

Janet Avila, president of String Theory Yarn Co. and chairwoman of the Downtown Glen Ellyn Alliance, agreed.

"It just makes me a little nervous because you never know what's going to change consumer's behavior, but I think Cook County has a reputation for having a huge sales tax, so I can see avoiding going there to buy something," she said. "I don't know if it's an issue between suburbs."

Jones said some of the money collected by the sales tax also could be set aside for downtown improvements.

The village board agreed to discuss the issue next week.

"Municipal budgets are in a state of dire need," Village President Vicky Hase said.

But she also said the village needs to demonstrate it has made every possible cut and the tax increase is the only remaining option.

"We need to show our residents we're really running bare-bones," she said.