Mundelein residents and business owners will see a new utility tax on their bills starting in January, which officials say will help fund road projects and strengthen the village’s coffers.
The tax, which will affect electricity and natural gas bills for residents and businesses in town, was approved at the Aug. 23 Village Board meeting, with all but one village trustee supporting the tax.
North Shore Gas is the actual gas utility supplier and ComEd provides electricity. Village officials explained that Mundelein will request that the utility companies put the tax on customers’ bills, collect it and then forward the money to the village. Each utility company will keep 3%, village officials said.
The board opted to go with a “phased approach,” which will see the tax start at 3% in 2022. It will go up to 4% the next year and then cap at 5% in 2024.
The tax will show up monthly on utility bills. Residents and businesses in town get their gas through North Shore Gas, and their electricity through ComEd, officials said. This tax will be forwarded from those companies to the village. They will also keep 3%, officials said.
Village Administrator Eric Guenther said at the meeting that staff plans to use 40% of the revenue from the taxes to increase the village’s reserves, and the remainder on street projects. Once reserves get back to 50% of expenditures, all of the money from the taxes will be spent on the street program, Guenther said.
Following the meeting, Guenther told Pioneer Press the village is sensitive to the financial issues some in the village are having.
“My hope is (people) correlate these dollars directly to the use,” he said. “And the use is to improve our streets and roads because it’s in dire need.”
To maintain Mundelein’s streets, the village needs to dedicate between $6 million and $7 million per year to the street program, according to village documents. That includes 188 lane miles. From fiscal year 2018 to fiscal year 2022, the village’s funding for roads averages a little more than $3 million annually.
Reserves dating back to fiscal year 2013 have also seen a steady decline. Fiscal year 2013 saw the village have about $14.5 million in reserves, which is about 61% of expenditures. Fiscal years 2020 and 2021 have a projected $11.3 million in reserves, which is about 40% of expenditures, according to village financial records. About $2.8 million would be needed to get reserves back to 50%, which Guenther said the village was aiming to do.
“Our annual costs go up at a steady rate that is much out of our control,” Guenther said. “Unless we create new revenue streams, we’ll fall farther behind.”
Trustee Tim Wilson talked at the meeting about the amount of work the village staff had put into looking for new revenue streams, mentioning some ways the village has raised money without increasing taxes.
“It’s not all about just raising taxes,” he said. “I don’t think anybody wants to raise taxes, but we do have to find different, more efficient ways to drive more revenue.”
Trustee Erich Schwenk said it had been a difficult decision for him, but ultimately decided to vote in favor of the utility tax. He cited his original goals when he ran for a seat on the Village Board, which were to improve infrastructure and consider fiscal responsibility.
“After being involved in budgeting for this village for the past several years, I can see that there’s not room to squeeze anything else out of it,” Schwenk said. “I don’t like this, but I can support it tonight.”
Mayor Steve Lentz agreed with Schwenk, noting that revenue for infrastructure has not kept pace.
Trustee Sol Cabachuela cast the lone “no” vote. While she didn’t comment at the meeting, Cabachuela told Pioneer Press that she didn’t feel like it was the right time to pass the tax given the financial issues residents are having due to the coronavirus pandemic. She added that she understood the need to find money, but thought there were other ways to go about it without burdening residents.
“We’re not even out of a pandemic yet and there’s so many people that are just backlogged with rent due,” she said. “I know for a fact there’s so many people in the community who are just trying to get back on their feet.”
Tom Ouimet, a resident who ran for mayor earlier this year, criticized both the board and the new tax at the meeting. He mentioned the need for the board to cut expenses to bring their reserves up, as well as the importance of bringing in businesses to increase sales tax.
“It wasn’t the (residents) that overspent the last eight years, it was the board,” he said. “You were not good stewards with our tax dollars. Now you’re coming to us for more money. That’s not right.”