Hanover Park to raise utility tax

Updated 2/21/2014 4:41 AM

Forecasting a more than $600,000 budget shortfall next year without new revenues, Hanover Park officials have agreed to raise the electric utility tax.

The average single-family homeowner will pay $4.71 per month, representing an increase of $2.69. Trustees directed the village staff Thursday to craft an ordinance that will outline when residents and businesses will see the raises on their electric bills.

The increase comes less than two months after the board voted to raise the property tax levy by 4.99 percent -- generating an extra $529,000 -- due to budget constraints. The levy would have jumped nearly 7 percent on the 2014 property tax bills under a recommendation by the village staff, but the board quashed that proposal in favor of diversifying revenue sources and slashing costs.

"We've been wringing our hands when we were trying to raise the property taxes even more," Mayor Rodney Craig said. "We said we've got to find another alternative."

With the electric utility tax hike, the village stands to collect an estimated $670,000 annually. Officials could begin including the proceeds in a proposed budget covering May to December 2014. The eight-month spending blueprint is projected to generate a nearly $30,000 surplus as Hanover Park switches from a fiscal year starting May 1 to a calendar year for financial planning.

But the 2015 tentative budget -- and fears of a substantial shortfall -- had trustees turning to the existing tax on electricity use.

"The alternative would be laying people off," Craig said. "We don't want to do that. We're trying to be as frugal as we can with our salaries and everything else."

Besides helping plug the budget hole, the utility tax dollars will go toward modernizing technology and repairing roads, Finance Director Rebekah Flakus said. One of the village's long-term goals is setting up a fund for the IT department. The increase becomes official when the board votes on the ordinance, expected in March.

Craig said he's committed to bringing new development to Hanover Park so sales tax dollars shoulder more of the burden of the village's operations. Currently, property taxes account for 38 percent of the village's revenues, officials said.

"We're trying to be frugal with what we have and be considerate of the taxpayers in the community," he said.

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