DOWNERS GROVE – Downers Grove commissioners are expected to vote July 18 on a 1-percent food and beverage tax, which is designed to generate new revenue for the village.
The proposed tax would take effect Jan. 1 and be imposed on alcohol, prepared foods, packaged liquor and non-alcoholic beverages for immediate consumption.
Commissioner Bob Barnett believes the tax should be higher. He asked the Village Council at its July 11 meeting to consider a 1.5 percent food and beverage tax.
“I think we need to think carefully about how we go at this,” said Barnett, who added that other communities have 2-percent food and beverage taxes. He said consumers don’t factor in a community’s food and beverage tax when making dining choices.
Barnett called the revenue generated by the tax “a nice shot in the arm” but said it would not solve the village’s long-term budget challenges because current revenue streams are unreliable over the long term.
“I think it’s probably the right move, but let’s not do it half way,” Barnett said.
The new tax was first discussed in May as a way for the village to garner new funds. A 1-percent food and beverage tax would have generated $1.5 million in 2016 and gone a long way toward closing the gap between revenue and expenses, Village Manager Dave Fieldman said.
The village estimates a $1.3 million decline in sales and income tax revenue for 2017, officials said.
Fieldman said the village’s general fund revenue is not sustainable. In fact, revenue has been down in four of the last five years. The village generates the bulk of its revenue from four sources: sales tax, property tax, utility tax and income tax. All have been down or flat over the past few years, he said.
Fieldman said the village has gone to considerable lengths to control costs before considering changes to its revenue model, including staff reductions in all departments. Over the past nine years, the village has reduced full-time equivalent staff from 375 to 309, a 17-percent reduction, he said. During that same time frame, general fund expenses have increased 11 percent.
Ongoing expenses, including significant hikes in public safety pension contributions, have made it clear revenue will not keep pace with expenses in the future. In fact, 80 percent of the expense increases over the past nine years are the result of public safety pension contributions, Fieldman said.
However, the village cannot reduce staff over the long term, which should lead the Village Council to have serious discussions about service levels, Barnett said.