1% Sales Tax Increase in Homer Glen Effective July 1, 2009.
The Illinois Department of Revenue mailed information to businesses regarding sales tax rate increases. A link is provided below to their Informational Bulletin – Sales Tax Rate Change Summary.
Sales Tax Rate Change Summary, Illinois Department of Revenue Informational Bulletin
Sales Tax Increase PowerPoint Presentation
Sales Tax Increase Presentation (PDF 3.39MB)
The Village Board of Homer Glen passed a 1% sales tax increase Tuesday evening (January 27, 2009) as part of the Mayor’s economic stimulus program. "I appreciate the Board’s support of this initiative. It is not easy to talk about taxes in this economic climate. However, the Village does not have a municipal property tax and I want to keep it that way."
Homer Glen incorporated in 2001 with a desire to preserve the rural landscape and maintain the quality of life for its residents. Incorporation efforts pledged ‘neutral’ costs to its residents upon incorporation and therefore a municipal tax was not levied.
The Mayor has been supportive of the 1% increase since it was first discussed at a Village Board meeting in September of 2007. At that time the Village investigated its adoption as part of a referendum process. However after analyzing the broader benefits of home rule status, Village efforts focused on a special census to reach the necessary 25,000 population threshold. Mayor Daley stated, "reaching home rule status allowed us to maximize our ability to exact developer impact fees so that development pays its own way. With an accurate population count we can now collect our fair share of the per capita tax. We have proven ourselves to be fiscally responsible, with yearend surpluses and zero debt. We need a new revenue source to leverage the funding for the many projects identified in our community development plan."
The Mayor stressed the need to minimize the impact on Village residents and businesses. "Any kind of tax is a sensitive issue, however we estimate that 50% of the sales tax increase will be collected from non-residents, and that is a conservative estimate. We want to capture the benefits of our access to I-355 and the additional traffic we continue to see on 159th Street. It is important our residents understand that unless we do something to encourage economic development it is going to pass us by. New business means additional business activity which is good for our existing businesses. This is good financial planning."
The Mayor referenced the village website where information is available on the benefits of the sales tax increase. He is working with the Village Board to finalize a community development plan that will prioritize projects that could not go forward without the new tax.
"There are many projects that the Village would like to undertake to maintain the quality of life for our residents and secure our financial future," the Mayor stated. Some of the initiatives mentioned included a sewer extension between Cedar and Cougar Road to encourage commercial development along 159th Street; flooding control and road improvements, large park acquisition, public safety, economic development programs and a village hall. "We currently pay $22,000/month for our lease space. Not only are we watching that money fly out the window each month, we are occupying valuable retail space. It doesn’t make financial sense. The sewer extension will spur commercial growth and we can recapture the cost of the sewer line as properties develop," the Mayor stressed.
Members of the Board expressed support for the 1% increase noting the need for parks, flooding control, open space preservation and the implementation of the goals and objections from the Green Vision Statement. The new tax is expected to generate over 6 million dollars in the first three years of collection.
The increase will result in a 8% tax rate (exclusive of groceries, medical and titled purchases) which is equal to or lower than many of the surrounding communities including Orland Park, Lemont, New Lenox, Romeoville, Bolingbrook or Joliet . The Mayor noted "the sales tax increase represents just one cent on the dollar."
General Information
Since incorporation, the Village has approved the Comprehensive Plan and the Green Vision Plan, and has completed work on a Parks Master Plan and a Transportation Plan. A Master Stormwater Plan has been recently initiated also.
With no Village property tax, the Village does not have sufficient revenues to accomplish many of the goals in these plans, which were developed with substantial citizen involvement. The sales tax is expected to provide a revenue stream of about $2 million per year which could be used for drainage and flood protection, new parks, trails, road improvements and a town center or Village Green. The figures presented in the September 25th presentation showed that Homer Glen has the lowest per capita revenues of 10 area communities studied.
The Village estimates that over 50% of the new sales tax would be paid by non-residents passing through the community or coming to shop here. The additional tax would not be charged on food, drugs, medical supplies or titled purchases such as vehicles and boats. A 1% sales tax means that for every dollar of items purchased, one cent is added on for the new tax.
Mayor’s Report Presented at January 27, 2009, Village Board Meeting.
At our last Board meeting I announced an economic stimulus program which included a proposal for a 1% sales tax increase. During that meeting I outlined the components of the program which included the identification of several community development projects that address the infrastructure and recreation needs of our village.
The development of this initiative has been a long process, dating back to the fall of 2007 when I first proposed the sales tax increase at a Village Board meeting. At that time the Village investigated the passage of a 1% sales tax increase through the referendum process. However it became apparent that we were working against the clock for a February vote, therefore we concentrated our efforts on conducting a special census in pursuit of home rule status. It was determined that the opportunities home rule provides went beyond just the sale tax potential for increased revenue. Home Rule provided the opportunity to impose development impact fees beyond those previously available to us. The accurate population count of the special census also allowed us to collect our fair share of the per capita tax.
Back in the fall of 2007, we spent a lot of time analyzing the pros and cons of increasing the sales tax. A power point presentation was created and presented at various meetings including at the village board. The presentation was posted on our village website where it can still be viewed today along with a summary of the sales tax proposal. I have made several presentations within the community and recently Trustee Ward met with the Homer Township Chamber to discuss the proposal with their Board. An email survey was sent to over 300 chamber members regarding the 1% sales tax proposal. The press has also done a good job on covering the issue with a recent poll of shoppers at one of our local stores. The responses reported in the paper unanimously either supported the proposal or stated it would have minimal impact on their shopping patterns.
I have consistently supported a sales tax increase since it was first discussed in 2007. As a newly elected official it became apparent very early on, that the Village did not have the revenue sources to support the various goals and objectives established in our planning documents. We do not have a municipal property tax. Surprisingly, there are still residents that do not realize this.
We have proven ourselves to be fiscally responsible and continue to operate the village with zero debt. We work within our budget and are conservative in our spending. We completed the fiscal year with a net surplus and still transferred $250,000 to our Capital Projects Fund. We expect to see similar numbers this year despite the downturn in the economy.
Homer Glen operates with one of the lowest per capita revenues in the region with a ratio of $332/per person compared to communities like Lockport, Palos Park, Lemont which operate with ratios up to $1,014 /per person. We are also strategic in our planning efforts to maximize revenue opportunities and restrict our spending. The annexation of the Goodings Grove Shopping plaza resulted in an immediate increase of 20% in sales tax revenue which can grow to 30% upon full build out of Goodings Grove and the Meijer’s development. We operate with minimal staff and have one of the lowest ratios of employees per capita in both Will and Cook counties.
I believe I can speak for the Board when I say we understand the economics that our residents and businesses are facing today. We aren’t asking anything of our residents that we aren’t asking of ourselves. We have proven our conservative management of the village’s finances, but we simply cannot move forward in accomplishing some of the basic goals if we don’t identify a new revenue source. The home rule sales tax allows the village to spread the burden beyond our residents and still remain competitive with the tax rates in neighboring communities.
It is important that residents realize that the passage of the 1% sales tax is not enough on its own. The revenue that is anticipated from the home rule sales tax is tied to a community development plan that identifies tangible capital improvements. The two go hand-in-hand. These are projects that can improve the quality of life for our residents and the long term financial security of the village.
We have over 1,300 acres of property waiting for commercial development. A large portion of our commercial future lies along 159th street. With the opening of the I-355 tollway, we have increased our economic opportunities along this corridor ten-fold, yet without the ability to serve these properties with sanitary sewer, the area will not develop. One of the community development proposals that we are investigating is the extension of the sanitary sewer between Cedar Road and Cougar. This public improvement will open up the entire area to new development, creating increased commercial traffic for our existing businesses, creating jobs and sales tax revenue and provide for the sewer needs of the proposed high school site on Cedar Road.
By adopting the increase this evening we position ourselves to take full advantage of the lull in the construction industry for a more cost effective sewer project. It enables us to be ready for new development when the economy turns around. This is smart financial planning. We will be able to leverage the income we anticipate from the sales tax increase for other community projects as well including road improvements, flooding control, a large park acquisition, economic development programs, public safety and a new village hall.
These are exciting times for Homer Glen. We have built a strong foundation and we now have the opportunity to capitalize on the opportunities provided by home rule with a 1% sales tax increase. This is just one penny on the dollar on non-grocery, non – medical and titled goods sold within the community.
Mayor Jim Daley