Bartlett mulls 1-percent sales tax, dropping utility tax
Bartlett officials are wrestling with whether a combination of a new 1-percent home rule sales tax and eliminating the village's utility taxes could be the way out of the reserve spending of recent years -- while also overcoming revenue cuts from the state.
The moves would bring a net increase of about $1 million to village coffers, officials say. They also would keeps Bartlett businesses competitive since neighboring communities' sales taxes are at or above the same level, Village Administrator Paula Schumacher said.
"It will cover that deficit and put us in a better position moving forward," she added.
But during a village board discussion last week, Village President Kevin Wallace chose to defer a final decision until after all other aspects of the proposed 2018-19 budget are reviewed Wednesday.
"I'm looking for a happy medium," Wallace said. "I think there's still room to trim in the budget."
Wallace and Schumacher agree Bartlett has a long tradition of being fiscally conservative.
However, the village has been dipping into its reserves for the past few years to balance its budget, with the expectation that an improving economy would soon correct the situation.
While reserves remain at an acceptable level, making a habit of such spending is unsustainable, Schumacher said. And the situation worsened last summer when the state made a 10 percent cut to the Local Government Distributive Fund (LGDF) by which it shares its income tax revenue with municipalities. That cost Bartlett $400,000 for the year.
That loss adds to an already projected $400,000 deficit, plus another $7,000 loss from a change in the way the state calculates the corporate personal property replacement tax.
Wallace said Bartlett's financial conservatism has helped it resist temptation to follow its neighbors' example of having a local sales tax of 1 percent or higher.
"I don't think we'd be talking about it even now if the LGDF hadn't been touched," he said.
Wallace also doubted that many villages, faced with the same dilemma Bartlett has now, would be considering giving up their utility taxes as an exchange.
Current village revenues from natural gas and electricity taxes are about $600,000 per year, after about $60,000 is rebated to seniors. The 1-percent sales tax would generate about $1.6 million.
A sales tax would not include groceries, gasoline or medical purchases. And eliminating the utility taxes -- whether gradually or altogether -- has been a long-standing goal of the village board, Schumacher said.
Wallace said dropping the utility taxes would cut out the senior rebate process. A sales tax offers a greater amount of choice to consumers and affects nonresidents as well, he added.
Given the relationship between the village and the Bartlett Area Chamber of Commerce, the business organization is not likely to oppose the plan, chamber President and CEO Nanette Gudenkauf said.
The village board's budget review meeting is scheduled for 6 p.m. Wednesday, followed by its next regular and committee-of-the-whole meetings at 7 p.m. Tuesday, March 20. All are at village hall, 228 S. Main St. in Bartlett.
The village is seeking a final direction on its next budget this month before it takes effect on May 1.