GEL BIG PICTURE: Glen Ellyn Board Considers 1% Home Rule Sales Tax Increase to Balance 2009 Budget

Like many families, businesses, non-profit organizations, and other municipalities across our nation, the Village of Glen Ellyn is juggling the financial woes of having to trim costs with finding new revenue sources to make up for budgetary shortfalls.

One avenue the Village Board is contemplating is to enact a 1% sales tax increase using its home rule authority. The increase would apply to the sale of products except: groceries, drugs (both prescription and non-prescription), and vehicles. Excluded from the tax are services like massage, medical treatments, and haircuts.

The Village staff is recommending a 1% local sales tax. This tax would generate approximately $1,500,000 per year.

Local sales taxes are already common in DuPage County municipalities and in many communities throughout the metropolitan area. Nearby examples, include: Wheaton-1%, Lombard-1% (plus an additional 1% at Yorktown shopping center), Warrenville-1.25%, Glendale Heights-.75%, Addison-.75%, and Carol Stream-.5%.

The Glen Ellyn Chamber of Commerce and a group of concerned downtown retailers voiced opposition to the tax stating an additional increase in sales tax would place an undue burden on customers and discourage people from shopping in Glen Ellyn. They also would like to see further exploration of cost reductions and revenue options explored. David Fieldman, village manager in Downers Grove, said that when Downers Grove approved a home rule sales tax increase in 2003 to fund capital and storm water projects, "we did not see any negative impact to retail sales within the village."

The Village of Homer Glen (population of 25,069 and over 7,716 households) recently passed a 1% home rule sales tax increase on January 27, 2009. View information about their decision to enact the sales tax increase here:

http://www.homerglen.org/regulations/HomeRule.htm

http://www.homerglen.org/regulations/SalesTaxIncrease.htm

Home rule was automatically granted to Glen Ellyn when its population exceeded 25,000. It can be rescinded by voter referendum which has happened in very few towns.

Because the Village Board wants to limit the duration of the increase sales tax, two ordinances have been drafted: the first is the ordinance to enact the 1% sales tax, the second ordinance requires an annual review of the tax by any subsequent Village Board.

The tax will remain intact unless a future Village Board takes action to rescind or amend the tax. Future discussions of the tax would come before the Board in an open public forum for discussion as part of the annual budget review. Opponents to the tax increase can voice their concerns to the Board which could then decide to eliminate the sales tax increase altogether or reduce the rate.

A non-binding "straw vote" was conducted at Monday's meeting. Trustee Jim Comerford who voted for the tax increase and Trustee Tim Armstrong who voted against both agreed to limit the lifespan of an increase sales tax ordinance should the sales tax increase pass in final review. Future Boards would be required to review and vote to maintain the sales tax increase. Trustee Michelle Thorsell voted against the increase based on the current language of the sunset clause not being clear and strong enough. Trustee Peter Ladesic voted against the increase. Trustees Peter Norton and Mary Jane Chapman voted in favor of the increase. Breaking the Board tie, Village President Vicky Hase voted for the increase creating a majority vote in favor of the proposed ordinance. All trustees voted in favor of limiting the duration of the tax increase and requiring a regular annual review of the tax increase at future Budget discussions.

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Study by Center for Governmental Studies Northern Illinois University - Illinois Home Rule: A Thirty Year Assessment
http://www.cgsniu.org/portfolio/policy_profiles/pdf/policy_v1n1.pdf

Illinois Home Rule: A Case Study in Fiscal Responsibility
http://www.celdf.org/portals/0/pdf/Home%20Rule%20in%20Illinois.pdf

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