HomeMy WebLinkAbout09/26/1996 FC MinutesFINANCE COMIVIISSION
Minutes of the Meeting
September 26, 1996
I Call to Order
The meeting was called to order at 7:10 p.m. Those present included Chairman Richard Bachhuber,
Commission Members John Engel, Vince Grochocinski, John Korn, Jim Morrison, and Ann
Smilanic. Also present were Finance Director Brian Caputo, and Assistant Finance Director Carol
Widmer. Commission members Joe Etchingham, Newt Hallman, and Tom Pekras were absent.
II Discussion of Funding for Street Improvement Program
Finance Director Brian Caputo presented information on the Village's ability to implement Option 3,
as presented by the Public Works staff at the August 29 Finance Commission meeting. He also
presented a financing plan to support an Option 4. Although not discussed at the Finance
Commission's August meeting, Option 4 would also eliminate the entire backlog of streets in need
of reconstruction and resurfacing by the end of the year 2006. The primary differences between
Options 3 and 4 are that Option 4 could be accomplished with in-house engineering resources where
Option 3 could not and Option 4 would involve more level financing requirements.
The financing plans for both Options 3 and 4 were based upon the following assumptions:
1. Bonds will be issued each year to provide funds for the current year's program.
2. The debt service for each bond issue will extend over ten years.
3. Bonds will be sold at a 6% interest rate.
4. Home Rule Sales tax receipts will grow at a rate of 1 % annually.
Mr. Caputo identified three possible ways in which revenue could be raised to cover the debt service
requirement.
1. Home Rule Sales Tax. Each additional .25% in the rate would yield about $1,200,000
annually. Currently, the rate is .50%.
2. Telecommunications Tax. Each additional 1% in the rate would raise approximately
$350,000 annually. The Village's rate is now 2%.
3. Property Tax. For each $100,000 in annual debt service, the taxpayer with a home having
an EAV of $40,000 would see an increase of about $4.00 in their tax bill.
The; members of the Finance Commission discussed the wisdom of issuing debt each year for the
next ten years to fund street improvements and after extensive deliberation they felt the best option
for the Village would be to fund the repairs on a current basis rather than by issuing debt. Several
reasons were voiced for that recommendation including the realization that there may be other
projects in the next ten year period which would need to be funded through the issuance of'debt.
The consensus was that a dedicated, current revenue stream was the best way to fund the street
improvement program. The committee also endorsed Option 4 over Option 3.
Commission member Ann Smilanic suggested several options as to how the needed funds could be
raised. These included increasing the utility tax from 2% to 4% which would produce approximate-
ly $1.5 million in additional monies which could be used for street projects, applying a 4% tax on
cable revenues which could produce $155,000 each year, and a modest increase in the vehicle
license fee. She also recommended that the revenue increase be limited to the period needed to fund
the street projects.
The members of the Finance Commission discussed the merits of several revenue sources based on
the suggestions made by Commissioner Ann Smilanic and others. Consensus was reached that all
Village utility taxes (natural gas, electric, and telecommunications) should be increased to support
the street improvement program. The committee felt that this approach would be most acceptable
to the residents, and impose minimal administrative costs with respect to collection.
The commission also concluded the utility tax rate should be reduced back to the 2 % level after the
10 -year street improvement program has been completed.
III Adjournment
The meeting was adjourned at 9:05 p.m. The next meeting is scheduled for October 17, 1996.
Respectfully submitted
Carol L. Widmer, Assistant Finance Director
CLW/sm