LA GRANGE – Staff at the village of La Grange proposed a 1 percent food and beverage tax that would cover a projected $200,000 budget shortage next fiscal year and replace a planned 1 percent increase in the village’s utility tax.
The Places for Eating Tax, conceived during strategic planning sessions involving village staff and trustees Nov. 1 and 2, would apply at businesses where food or beverages are prepared for immediate consumption, such as restaurants, cafes or stores where samples are offered – but not grocery stores.
During their Dec. 9 board meeting, village trustees said they want more information about the proposed tax and potential alternatives before voting on it. They plan to revisit the matter in January.
Village staff favors the food tax, which it projects would generate $350,000 annually, to a scheduled 1 percent increase in utility tax because the food tax would lessen the burden on La Grange residents. About 65 percent to 70 percent of food and beverage purchases are made by nonresidents, according to village studies.
“Our thought process in the case of the food and beverage tax is that so much of it is paid by others, and it’s actually adding additional revenue [compared to] what the utility tax would generate,” Village Finance Director Lou Cipparrone said.
The increase of the village’s utility tax from 3 to 4 percent, planned for May 1, 2014, would bring in only $175,000, Cipparrone said. Trustees voted the past two years to delay the utility tax increase until 2014.
If the food and beverage tax is approved, money leftover after maintaining the village’s current level of services could go toward funding a downtown valet service for businesses, filling village staff vacancies and infrastructure projects, Cipparrone said.
Several neighboring towns have a 1 percent food and beverage tax, including Hinsdale, Countryside and Riverside. Those villages haven’t reported any negative impact from the tax, village staff said in a report to trustees.
“We’re trying not to put more pressure on the property taxes and the residents if we don’t have to,” Langan said. “I think people will pay a 1 percent food and dining tax, and it really kind of goes unnoticed.”