Brookfield voters are virtually assured a referendum question on the March 2006 ballot asking for a 1-percent increase in local sales taxes, with Village President Michael Garvey tying the tax increase to street improvements.
During a presentation by representatives from Kane, McKenna Capital Inc. regarding funding options for large-scale capital projects, Garvey pressed the sales tax hike as Brookfield’s best plan for raising the kind of money needed to complete ongoing street improvements.
“We can be the ground-breaking board that comes up with a source of revenue, Garvey said.” “This will not solve all our problems, but we can start the process by doing it this way.”
Brookfield trustees are expected to vote on a resolution to place a sales tax referendum question on the March 2006 ballot at their Jan. 9 business meeting at 6:30 p.m. at the village hall, 8820 Brookfield Ave.
According to Philip R. McKenna, president of Kane, McKenna Capital, money received by the village from any non-home rule sales tax increase must be used for capital improvements or to reduce property taxes. The non-home rule sales tax has never been used by any Illinois municipality to reduce property taxes, McKenna added.
Garvey introduced the idea of asking voters for a sales tax increase last month, shortly after the Illinois General Assembly overrode Gov. Rod Blagojevich’s veto of Senate Bill 272, which allows non-home rule communities, such as Brookfield, Riverside and North Riverside to impose a sales tax of up to 1 percent if local voters agree to the hike by way of referendum.
Currently, non-home rule communities may ask voters to approve a local sales tax of up to a half-percent. The ability to impose up to 1-percent via referendum goes into effect Jan. 1, 2006.
If voters approve a 1-percent local sales tax, the village would receive over $400,000 per year in revenue that could be used to address road improvements, according to estimates provided by the village.
While that amount, in and of itself, would not be enough to fund much in the way of street improvements, that money could be used to pay the annual debt service on bonds. McKenna estimated that the village could issue between $2 million and $3.8 million in alternate revenue bonds using the sales tax to pay back the debt over a period of 10 to 20 years.
The debt service on alternate revenue bonds are not paid from property tax revenues, but through another source, such as user fees or, in this case, a separate sales tax.
Without the sales tax revenue, Brookfield’s ability to raise the kind of money needed for street improvements is limited, McKenna said.
The bill for Brookfield’s 2006 street improvement proposal alone was estimated in October between $3.6 and $4.1 million.
Brookfield could attempt to issue general obligation bonds to fund the improvements, but doing so would force the village to seek a referendum that would raise property taxes. On the other hand, the village could seek to issue debt certificates, which don’t require a referendum but which carry a higher rate of interest.
“The real question is, what is the source of the revenue that’s going to pay the debt?” McKenna said. “In the short term residents are better off, but five years down the road, expenses get higher and you have to pay those debt certificates off one way or another.”
If Brookfield is to benefit from a new local sales tax in 2006, the village board will have to move rather quickly. The deadline for submitting a referendum question that will appear on the March ballot to the Illinois State Board of Elections is Jan. 17.
Trustee Linda Stevanovich questioned the timing of the referendum, noting that Riverside-Brookfield High School and Brookfield-LaGrange Park Elementary School District 95 are also expected to put tax hike questions on the ballot.
“With three questions for a tax increase, will that make people vote against all of them?” she asked. “I’d support it, but the timing makes me skittish.”
Garvey responded that the timing was ultimately irrelevant.
“Each individual [referendum] question is going to have to stand on its own merits,” Garvey said. “I have faith in the voters that they can judge these independently. It’s always a timing question, but we have a sound reason to do this.”