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HomeMy WebLinkAboutFinance Commission Minutes_10_23_2019 - DraftFINANCE COMMISSION t a P"4 MINUTES October 23, 2019 Village Hall \ V 50 S. Emerson, Mount Prospect, IL 60056 Executive Conference Room — 3rd Floor I. Call to Order Meeting called to order at 7:08 p.m. Members present: Pam Bazan, Yulia Bjekic, Trisha Chokshi, John Kellerhals, Vince Grochocinski and Don Ocwieja. II. Approval of Minutes a. Motion to approve the amended minutes by Commissioner Bjekic, second by Commissioner Chokshi from the September 26, 2019 Finance Commission Regular Meeting. Chair Kellerhals called a voice vote. Yea: 6; Nay: 0. Motion Carries b. Motion to approve the amended minutes by Commissioner Grochocinski, second by Commissioner Bazan from the October 10, 2019 Finance Commission Special Meeting. Chair Kellerhals called a voice vote. Yea: 6; Nay: 0. Motion Carries III. Citizens to be Heard: None. Chairman Kellerhals requested the Financial Impact of the Legalization of Recreational Marijuana under New Business to be discussed prior to Drafting a Response to the Village Board for the Budget 2020 under Old Business. There was a consensus from commissioners to hear the New Business item first. IV. New Business a. Financial Impact of the Legalization of Recreational Marijuana. Finance Director Amit Thakkar made a presentation regarding legalization of recreational cannabis, dispensaries and taxation. He stated the State will be awarding 75 initial licenses by May 1, 2020 to existing medical cannabis dispensaries and an additional 110 licenses will be issued by December 2021. Municipalities with a recreational cannabis dispensary can levy a Retailer's Occupation Tax (excise tax) in increments of a quarter percent, maximum up to three percent. In addition, the sale of recreational cannabis also attracts regular two percent sales tax. Finance Director Thakkar presented a revenue calculation per the Illinois Economic Policy Institute. The Finance Commission Page 1 of 4 10/23/19 average sales per dispensary is $8.7 million which would generate a local tax revenue of $437,000 not including license and inspection fees or food &beverage tax on edible prepared items. He provided an overview of how the State will disperse their share of tax revenue including the eight percent transferred to the Local Government Distributive Fund (CGDE) and shared based on per capita with municipalities. These funds are for enforcement, mental health provisions and education. The estimated increase to LGDF revenue of three dollars per capita would be in the range of $160,000 for Mount Prospect. There was general discussion between staff and Finance Commissioners regarding: • A recommendation to allow recreational cannabis dispensaries within the Village. • Local excise tax, sales tax, and food and beverage tax revenue estimates. • The existing Mount Prospect medical cannabis facility, their interest in obtaining a recreational cannabis dispensary license and the demand for village services from it operating as a recreational cannabis facility. • The possibility of funding public safety pensions or operations with recreational cannabis tax revenue and to abating the property tax levy. • Bond rating agencies evaluation of the Village's pensions are less than 60% funded and liability is much higher, because the agencies use their own assumptions. • An AAA bond -rating would have saved $700,000 in interest for the Village's Police Headquarters bond issue. A handful of area communities are rated at AAA. • Not placing a cap on the number of recreational cannabis licenses, since each business would need conditional use approval to operate. • The distance requirements mirror the Village's liquor license restrictions. Increasing distance requirements would inadvertently prohibit recreational cannabis dispensaries, since there would be no retail location that could accommodate a facility. • Drug Recognition Experts (DREs) and blood tests are the current approach to test for intoxicated drivers. Colorado also uses DREs. • The Village will have a financial impact for enforcement regardless of any Village decision on recreational cannabis businesses. • The three percent excise tax possibly being a competitive disadvantage for a dispensary located in Mount Prospect. Option to reconsider the three percent excise tax after the state issues more recreational dispensary licenses. • That cannabis is still illegal per federal law after January 1, 2020. Illinois dispensaries currently have two state banks to work with. • The need to affirmatively opt -out if the Village does not want recreational cannabis facilities. If the Village takes no action, then the state law would still apply. • The social justice impact of the recreational cannabis bill. • Illicit sales have not gone away in other states with recreational cannabis. Motion by Commissioner Bjekic, second by Commissioner Chokshi, to recommend the Village authorize the sale of recreational cannabis subject to local ordinance. Chair Kellerhals called a voice vote. Yea: 6; Nay: 0. Finance Commission Page 2 of 4 10/23/19 Motion Carries. Chair Kellerhals called for a short recess at 8:43 p.m. Recess ended at 8:48 p.m. V. Old Business a. Drafting a Response to the Village Board for the Budget 2020 Finance Director Amit Thakkar stated this agenda item is to facilitate additional discussion from staff presentations on 10/10 with the Finance Commission and 10/22 during the Joint Workshop of the Village Board and Finance Commission. This discussion will result in a recommendation from the Finance Commission as a response to the Village Board for the 2020 Budget. There was general discussion between staff and Finance Commissioners regarding: • How the recommendation would be shared with the Village Board. There would be a motion and second to do something (e.g. approval of the budget with the following conditions) and there would be a vote or might be a series of votes. • Using the median home value vs. $350,000 for the property tax levy impact overview. • Further drawing down available fund balances in lieu of a property tax levy increase. • Sales tax revenue is the significant contributor to the Village's reserves. If top sales tax generators were negatively impacted by outside events or competition, the Village's fund balances would be directly affected. • Staff proposed pension and economic stabilization funds. • If commercial property assessments increase 40% and residential property assessments increase 8%, then residents would be paying less tax. • The proposed budget does not currently include revenues from recreational cannabis. • The two percent property tax levy increase would be to prefund the planned expansion of the fire service on the south end of town to address the service gap with the expiration of the Elk Grove Rural Fire Protection District in the near future. • There are three different fire service strategies under consideration with different costs associated with them. Motion by Commissioner Bazan, second by Commissioner Chokshi, to accept the budget as presented. Chair Kellerhals called a voice vote. Yea: 4; Nay: 2 Motion Carries. VI. Any Other Business None VII. Chairman's Report None. Finance Commission Page 3 of 4 10/23/19 VIII. Finance Director's Report None. IX. Next Meeting: Thursday, January 23, 2020 X. Adjournment: Motion made by Commissioner Chokshi seconded by Commissioner Grochocinski. The meeting adjourned at 10:02 pm. Alexander Bertolucci Management Analyst Finance Commission Page 4 of 4 10/23/19