A proposed 3.75 percent telephone use tax has received the backing of Des Plaines officials, who hope it will generate $2.8 million a year and ease the drain on the city’s cash reserves.
If approved at a July 15 City Council meeting, the tax would go into effect Jan. 1, officials said at a council meeting Monday night.
The city’s cash reserves have dwindled to $3.6 million from $7.8 million in 1998, Finance Director Jim Egeberg said.
Declines in cash reserves and tax revenue are threatening Des Plaines’ bond rating, Egeberg said. He also said that without a new tax the city could violate its own ordinance that requires its cash reserves to be at a certain level in proportion to general fund expenditures.
Most area communities currently require telephone users to pay a tax of 3 percent to 5 percent, Egeberg said.
Aldermen also moved to close a loophole that allows non-Nicor Gas customers to avoid the current 3 percent tax on gas utility bills. In March, residential gas users were allowed to begin buying natural gas from firms other than Nicor.
Under the measure, the 3 percent tax on gross natural gas receipts would be replaced by a 2.5-cent per therm fee for all gas customers.
Almost half the gas used in Des Plaines in 2001 was not taxed because many industrial customers buy gas from non-Nicor sources, officials said. Closing the loophole will help the city gain about $300,000 a year, Egeberg said.
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