Faced with the challenge of paying for both flood relief and pensions for and , the Niles village board voted 4-2 to pass a 0.25 percent sales tax increase Tuesday. The tax amounts to 25 cents on every $100 of merchandise purchased in the village.
The increase would bring the village's portion of sales tax to 1.25 percent, and it goes into effect on July 1, according to a draft of the ordinance provided at Tuesday's meeting.
This move is separate from a pending proposal to . If that happens, the increase would come on top of Tuesday's village-wide sales tax increase.
Tuesday's move would raise $2.1 million
Regarding the village-wide tax increase, "We're estimating it would raise $2.1 million (annually), based on current sales tax revenue," Scot Neukirch, the village's finance director, confirmed on Wednesday. If the economy improves and consumers start buying more goods, that number could go up, he added.
Trustees talked for more than an hour discussing the hard choices of how the village can meet the sizable looming costs of both stormwater relief and pension funds.
Arguing to finance flood relief
Trustee Andrew Przybylo emphasized that many residents' homes flooded in 2008, and also more recently, because the village has not modernized its sewer system.
A village committee and is recommending
"Don't lose sight of the fact our citizens are suffering because of flooding," Przybylo said.
However, other trustees made the point that the village is required by state law to fund firefighter and police pensions.
Village already on hook for pensions
Trustee Jim Hynes said the village's first obligation was to pay off its current debts (including pensions) and that the village's budget should fully fund pensions every year. He wanted to see how much the sales tax increase would generate for flood relief, and then see how much money would be left over to be applied (as extra money) toward funding pensions.
Trustee Rosemary Palicki also voiced concerns about current debt.
"We have $50 million in unfunded liability for pensions, and now we’re talking about taking on an additional $10 or $15 million (in costs for stormwater relief)," she said.
"I empathize with all the people who have water problems, Trustee Przybylo, I sympathize, but I’m concerned with us taking on more debt than we can take care of," she added.
Mayor Robert Callero commented that when the quarter-percent sales tax increase expires in 20 years (in 2032), the trustees at that time would have the option of continuing it in order to fund pension liability.
The state of Illinois requires pensions to be 90 percent funded by 2040, said Neukirch.
More information on the village's pension funding is available by clicking here, then selecting the Fiscal 2012 budget and scrolling to page 104.
Trustees Palicki and Louella Preston voted against the sales tax increase, with Preston saying she could not support it as written, and Trustees Hanusiak, Hynes, LoVerde and Przybylo voted in favor.