How Tax Flew Under Radar, Why Niles Passed It
Village did not ask for public input, though another proposed tax increase will get a public hearing. The finance committee chair said the sales tax option was least likely to cause hardship.
Many Niles residents were caught by surprise when the village passed a sales tax increase Tuesday. It had only been briefly discussed in village board meetings in November and December.
In those months, trustees were considering how to fund a big-ticket item--the modernizing of Niles' sewer system to help prevent the flooding of homes. At the November board meeting, Village Finance Manager Scot Neukirch presented five possible ways the village could pay for the flood relief efforts. Those included a property tax, sales tax and fee based on what percentage of property owners' lots are impermeable.
Earlier: Niles raises sales tax
Trustee Joe LoVerde said Friday that the idea to go with the sales tax originated at a stormwater committee meeting, and then the finance committee gave its consensus at its meeting. LoVerde chairs both committees.
Proposed tax was not publicized
Committee meetings are public, but seldom attended by anyone other than committee members.
When asked whether the village notified residents or the business community that the village board was considering a sales tax, LoVerde responded, "Not to my knowledge."
Thus, most people did not learn a sales tax was on the table until the Jan. 24 village board meeting, and as a result, the public did not get much of a chance to ask questions or express opinions on the sales tax.
On Wednesday, George Van Geem, the village manager, said that the public could have commented on the sales tax during the finance committee, stormwater committee and committee of the whole meetings which took place after Neukirch made his presentation in late November.
Public hearing for one tax, but not the other
The village is considering a plan that would in effect impose an additional 0.25 percent sales tax increase only at Golf Mill Shopping Center, and this proposed hike will get a public hearing, scheduled for Feb. 28.
Golf Mill originated this plan in order to get revenue to modernize its infrastructure. The village would declare Golf Mill a "business district," in the sense of that term defined in Illinois law. That would give the village the power to charge the additional sales tax and funnel it along to Golf Mill.
So why is the proposed Golf Mill sales tax increase getting a public hearing, while the village-wide sales tax increase passed Jan. 24 did not?
"The state law that deals with business districts requires a public hearing," Van Geem said Monday.
No hearing was required for the village-wide Jan. 24 sales tax increase because home-rule municipalities, like Niles, have the authority to raise taxes and fees to fund the normal course of doing business, he said.
"You don't need to have a hearing every time you raise a fee or tax, if you're home rule," he explained.
Sales tax called least hardship
The fact that non-Niles residents pay the majority of Niles' sales taxes helped shape their decision.
"We would have had to raise property taxes to a level that would have caused a hardship for some residents," LoVerde said.
"Seventy percent of sales tax revenue generated is from non-residents (of Niles). It seemed that the least hardship put on people would be sales tax."
County lowers tax, Niles raises it
LoVerde also said officials considered the fact that the .25 percent tax increase would come at an opportune time, since Cook County lowered its sales tax by .25 percent, effective Jan. 1, 2012.
"One of the contributing factors was that tax would remain the same (in Niles) because of Cook County lowering it," he said. (Niles sales tax stood at 9.5 percent last year, went down to 9.25 percent on Jan. 1, and will rise to 9.5 again on July 1, when the Niles village board's newly-approved tax goes into effect.)
Many not aware of proposed tax hike
Many Niles business owners Patch contacted after the board's vote did not know a sales tax increase had been on the table.
"I did not have an opportunity to voice an opinion," said Joe Reichert, the owner of Amling's Cycle. He also wondered aloud if the board thought no one would notice the tax hike due to the county's lowering of its sales tax.
He qualified that, though, by saying "Niles is usually pretty good at taking care of business people."
Board to monitor new revenue
At Tuesday's meeting, however, LoVerde stated some conditions for the tax increase so that the money collected would remain accountable to the board.
The extra .25 percent of sales tax revenue would go into a separate account, he said, and monthly statements from that account would be sent to the board of trustees.
The money from the account could only be used for stormwater relief and pension funding for firefighters and police, he said. And if other sources of revenue were generated for those purposes, the tax could be rescinded.
"We want to keep close tabs on the tax and be sure it's used for the purpose for which it was intended," LoVerde said.
He also stressed the importance of relieving flooding problems for homeowners, which are caused by the inadequate capacity of the village's sewers, he said. LoVerde and the stormwater committee have been studying the flooding issue in depth in the three years since the severe 2008 floods.