West Dundee considering new revenue sources to fund capital projects

With a funding shortage anticipated for capital projects in upcoming years, West Dundee officials are faced with a decision: Cut back on spending or identify new sources of revenue.

On Monday, the village board indicated it would rather pursue the latter option in order to finance a six-year capital plan put together by village staff.

"When it comes to spending, we don't feel like there's a lot of fat to cut," Village President Chris Nelson said.

The infrastructure and equipment needs outlined in the capital plan are expected to cost roughly $900,000 annually, Village Manager Joe Cavallaro said. Projects include road resurfacing, parking lot repairs, building upkeep, infrastructure work, vehicle purchases and other maintenance work.

However, reliable recurring revenues only funnel about $550,000 into the capital fund each year, Cavallaro said. It's now up to the board to decide how to bridge the $350,000 gap.

Because of an unexpected surplus in last year's general fund, West Dundee was able to make up the difference for this fiscal year by transferring $300,000 into the capital fund. But relying on transfers from other funds is not a sustainable funding option, Cavallaro said.

"We know we have a need," he said. "The question is, how do we go about filling it?"

Trustee Michelle Kembitzky suggested making up the difference with another property tax hike. The village board last year approved a 14.5 percent levy increase, a portion of which is expected to generate $300,000 annually for capital improvements.

"We didn't do as much as we could have," she said. "We're still on the low end (compared) with other villages."

Though understanding of the village's capital needs, Trustee Dan Wilbrandt expressed frustrations with tax increases and other new sources of income.

The village has been borrowing money and implementing other financing mechanisms - for which Wilbrandt has routinely voted "no" - to fund a multimillion-dollar downtown project. In turn, he says, the village has allowed some capital needs to fall through the cracks and now has to "scrape together" last-minute solutions.

"Here, we are now talking about generating more revenue to pay for things we really do need," Wilbrandt said.

The village board is expected to discuss a potential property tax levy increase next month. Other ideas being considered include a residential rental fee increase and a real estate transfer tax, which would require voters' approval of a referendum question.

One-time revenue sources, such as tap-on and other development fees, are also viable options for funding certain one-time capital expenses, Cavallaro said. The village has accumulated more than $1 million in such fees over the last year, he said.

Though not ideal for a recurring capital program, he said, "it would provide for revenue sources to start filling that bucket."