HomeMy WebLinkAbout03/27/1997 FC MinutesFinance Commission
Minutes of the Meeting
March 27, 1997
I. Call to Order
The meeting was called to order at 7:00 p.m. Those present included Chairman Richard
Bachhuber and Commission Members John Engel, Vince Grochocinski, Newt Hallman, James
Morrison, Tom Pekras, and Ann Smilanic. Also present were Finance Director Brian Caputo,
Assistant Finance Director Carol Widmer, and one reporter. Commission Members John
Korn and Joe Etchingham were absent.
II. Approval of Minutes
The minutes of the January 23, 1997 minutes were approved as presented.
III. Presentation of the Monthly Report for February 1997
Finance Director Brian Caputo presented the Budget Revenue and Expenditure Summaries
for February 1997. In his review of year-to-date revenues, Mr. Caputo pointed out that a
portion of the first installment of the 1996 property taxes, which are paid in 1997, were
received in February. During his review of expenditures, Mr. Caputo mentioned that the
medical claims of $304,000 for the first two months of 1997 are considerably lower than the
$426,000 budgeted for that time period.
IV. Discussion of Revenue Mix Funding Alternatives for the Street Improvement Program
After 1997
Finance Director Brian Caputo reviewed the status of the Street Improvement Program. The
1997 Budget initially provided for the issuance of $2.5 million of general obligations bonds
to fund street resurfacing and reconstruction in 1997. In February 1997, the Village Board
made the decision not to issue bonds this year and chose to pay for the street work with
current available resources in the amount of $1.9 million. However, a decision must be made
as to how to fund the rest of the program which extends through the year 2006. Mr. Caputo
prepared several exhibits for the Finance Commission members to consider in their discussion
of the funding alternatives for the Street Improvement Program. The exhibits were attached
to his memorandum to the Village Manager dated March 21, 1997.
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Exhibit 1 presents the funding requirements for the Street Improvement Program. This
exhibit indicates that a total of $13,304,543 in new revenue would need to be provided over
the next nine years in order to fund all of the street improvement projects.
Exhibit 2 provides six revenue mix alternatives to be considered for funding the program.
Alternatives 1, 2, and 3 represent individual revenues which, if increased to the recommended
level, would provide the necessary funding. Under Alternative 1, the utility tax rate would
be increased from 2% to 4.5%. The 2.5% increase would provide all the revenue necessary
for the street program. In Alternative 2, the Home Rule Sales Tax rate would be raised from
.5% to 1%. Alternative 3 would require a 25% increase in 1997 property taxes (paid in 1998)
with 3% increases in the street improvement component of the levy through the year 2001.
Alternatives 4, 5, and 6 involve various combinations of revenues which could be used to fund
the program.
Mr. Caputo stated that he purposely did not include an increased vehicle decal rate in any of
the alternatives for several reasons. First, with a $1 increase in the decal rate yielding only
$30,000 to $35,000 per year, any total increase would need to be very large in order to make
a meaningful funding contribution. Second, a higher -priced vehicle decal would not provide
the increasing revenues needed for the program through the year 2001. Finally, a significantly
higher -priced vehicle decal would likely pose collection problems.
The members of the Finance Commission reviewed all six alternatives. As part of the
discussion, the Commission Members discussed the advantages and disadvantages of the
various revenues and the impact the mix alternatives would have on residents. They also
considered who would actually be paying the taxes and fees (i.e., owners, renters, residents,
non-residents) and when the revenues would be available. For instance, to establish an
additional .5% home rule sales tax, notification must be sent to the State of Illinois by
October 1, 1997 in order for the tax to effective January 1, 1998. The first receipts would
be sent to the Village in April 1998. In order to accumulate the funds necessary to pay for
a construction season, the timing of revenue receipts must be considered. Another element
the Finance Commission discussed was the cost of collection to the Village. Property taxes
and home rule sales tax are collected by state and county agencies and remitted to the
Village. The Village would be responsible for collecting gasoline taxes or additional utility
taxes.
After the discussion, the Finance Commission, as they did at their January 23, 1997, meeting
recommended that an increased utility tax be used to finance the Street Improvement Program
(Alternative 1) after 1997. A utility tax increase is favored by the members of the
Commission for the following reasons: utility taxes are paid by both businesses and residents,
all residents pay the tax whether property owners or renters, the utility tax grows naturally
with inflation, and there would be no increased collection costs because the collection system
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is already in place.
The Finance Commission unanimously recommends that a 4.5% utility tax rate be established
to fund the street improvement project with the provision that the 2.5% increase in the utility
tax rate be reduced after the year 2001.
V. Adjournment
The meeting was adjourned at 8:30 p.m. The next meeting is scheduled for Thursday, April
24 at 7:00p.m.
Respectfully submitted,
Carol L. Widmer
Assistant Finance Director