Libertyville approves new sales tax, drops its restaurant tax

  • Sales tax revenue from restaurants and other businesses along Milwaukee Avenue in downtown Libertyville are expected to drop as a result of the coronavirus pandemic.

      Sales tax revenue from restaurants and other businesses along Milwaukee Avenue in downtown Libertyville are expected to drop as a result of the coronavirus pandemic. Paul Valade | Staff Photographer, 2019

Posted4/16/2020 5:30 AM

At any other time, the series of financial-related actions taken Tuesday by the Libertyville village board would be considered part of normal business. But what lies ahead will be anything but routine.

Following strong voter approval in March, trustees formally enacted a 1% villagewide sales tax Tuesday. In turn, as promised, they eliminated a 1% Places for Eating tax -- two months earlier than originally expected.


Telecommunications and electric utility taxes were kept at current levels, and a 2020-21 budget of $62.3 million was approved.

The budget is balanced for village operations and does not rely on reserves or one-time revenue sources for operating purposes, according to a March 24 memo to the board from Finance Director Nick Mostardo.

However, the coronavirus pandemic has skewed daily operations and plans.

"I think we should all be ready to hang onto our seats," Trustee Pat Carey said.

Libertyville is particularly vulnerable to a drop in sales tax from restaurants and auto dealers.

"It's hurting everybody," Mayor Terry Weppler said Wednesday.

So a planned village board finance committee next week comes with ominous overtones. Some projects may be delayed, capital purchases deferred and other adjustments recommended.

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That meeting will include a closed executive session in which the status of village employees is likely to be discussed.

"Unfortunately, that's going to be part of the issue, too," Weppler said.

The village board later this week will receive an overview of the economic impact of COVID-19 and potential options.

"I am positive we'll have to make changes," said Trustee Rich Moras, who chairs the finance committee.

At this point, Libertyville is fortunate voters approved the villagewide sales tax. The new tax was expected to generate $2 million a year in new revenue. But its impact may be muted due to the drop in sales of all kinds.

The new tax does not apply to medicines, most groceries and titled products such as cars.

Officials said the sales tax would be a huge boost to village efforts to fix roads and pursue other projects. It will go into effect July 1, with the first distribution of funds expected in October.


The sales tax was pitched to voters as a reliable revenue stream to be invested exclusively in the village's aging infrastructure.

The board Tuesday also created a special fund to show that $2 million of the proceeds would be used for capital projects and an estimated $875,000 per year would replace operating revenues from the repealed Places for Eating tax.

The Places for Eating tax had been scheduled to run through June 30, but the board agreed to end it April 30.

Most restaurants are doing 20% to 25% of the business they were before the state's stay-at-home order and have laid off 80% of their employees, said Trustee Scott Adams, who also is the president/CEO of the GLMV Chamber of Commerce.

"This is an important thing for us to do," he said of eliminating the tax early.

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