Dig deeper, Mundelein: New taxes coming on natural gas, electricity
Mundelein residents and other property owners will have to pay municipal taxes on natural gas and electricity starting in January.
The combined taxes will cost the typical homeowner about $60 annually the first year. That sum will increase to about $80 in 2023 and to $100 in 2024, documents show.
The village board created the taxes Monday to raise money for street repairs and boost financial reserves.
The tax rates will rise in phases. In 2022, the rates will be about 3% on each service. They'll increase to about 4% in 2023 and to 5% in 2024, and then stay at that level.
The two taxes are expected to generate more than $1.1 million for Mundelein in 2022, more than $1.5 million in 2023 and $1.9 million in 2024.
At the start, 60% of the revenue will fund street repairs and 40% of the revenue will boost the village's reserves.
To adequately maintain local roads, the village should be spending between $6 million and $7 million annually, Village Administrator Eric Guenther said.
But the 2021 fiscal year's budget included $4 million for roadwork. The sum is even smaller -- $3.5 million -- in this year's budget.
The tax revenue won't get Mundelein to the desired $6 million or $7 million streets budget, Guenther said, but it will be "a huge leap forward" for the repair program.
As for reserves, officials want to keep a sum equal to 50% of the village's annual general fund budget in savings. Right now, the $11.3 million in reserves is about 40% of the $28 million budgeted for general expenses.
Property tax revenue typically comes in during the summer months, so reserves are needed to help pay for operations, debt repayment and other year-round expenses. Additionally, that cash can be a financial cushion during emergencies, such as when revenue from local sales, hotel and gambling taxes decreased during the pandemic.
It'll take about $2.8 million to get back to the desired reserves total, Guenther said.
Once reserves reach that amount, all revenue from the utility taxes will go to street repair programs, he said.
The board approved the new taxes with a 5-1 vote. Trustee Sol Cabachuela was the lone dissenter.
Before the vote, former mayoral candidate Tom Ouimet criticized officials for burdening taxpayers instead of finding other revenue sources.
"It wasn't us that overspent the last eight years," Ouimet said. "It was the board."
Later, Trustee Tim Wilson explained that village staffers have worked to find new cash streams, including efforts that boosted sales tax revenue.
Buffalo Grove, Grayslake and Hawthorn Woods are among the nearby towns that assess taxes on natural gas and electricity. Libertyville and Vernon Hills tax electricity but not gas.