Politics & Government

Sales Tax Referendum Gets Support

A majority of trustees on Wednesday agreed to ask residents for a half-percent increase in sales tax, to pay for road repairs and capital projects. The measure is expected to get a vote on Sept. 26.

Montgomery residents may soon get to decide whether they want to help pay for road repairs with a sales tax increase.

For some time, trustees have been struggling with how to fund the village’s ongoing street repair program. pours most of its motor fuel tax funds each year into resurfacing streets, plus whatever state and federal grant money can be found.

The village takes in about $480,000 a year in state-shared motor fuel tax funds. With grant money, village leaders managed to spend more than $1.5 million to fix streets in Fiscal Year 2010, and about $765,000 in FY 2011. After eight years of the street repair program, Montgomery has spent about $5.5 million to resurface and reconstruct about 10 percent of its system.

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The problem is, that’s not enough. And if they stay at their current pace, before long, the streets will begin to decay faster than the village can fix them, according to Village Engineer Pete Wallers.

A study conducted in 2008 recommends spending about $2.2 million a year, to keep up with deterioration. That’s far more than the village has in its coffers, even counting grant money—and Village Manager Anne Marie Gaura said she does not expect to see the same level of grant opportunity over the next five to 10 years.

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Also complicating matters: most of the new subdivisions on the west side were built within the past half-decade, and those streets will likely all need repairing at around the same time. It’s recommended that streets be repaired and resurfaced once every 20 to 25 years, Wallers said.

At Wednesday’s Committee of the Whole meeting, Finance Director Jeff Zoephel presented trustees with a choice: do nothing, and watch the roads disintegrate over time, or find another source of funding.

After much discussion, the majority of trustees, along with Village President Marilyn Michelini, agreed to ask residents for a half-percent rise in the sales tax. And they agreed to put that referendum on the March 2012 ballot, the next available option.

A half-percent increase would bring in an estimated $1.2 million a year, Zoephel said.

Montgomery’s sales tax rate is currently 7% in Kane County, and 7.25% in Kendall County. If the referendum passes, rates would rise to 7.5% in Kane and 7.75% in Kendall.

For comparison, Zoephel said, Oswego and Yorkville both have a current tax rate of 7.25%, with Yorkville’s business district at 7.75%, Sugar Grove’s rate at 8%, and Aurora’s at 8.25%.

And Zoephel pointed out that raising the sales tax would not put the full burden on Montgomery residents. Everyone who shops in the village would pay the higher rate.

“As the roads get worse, they will get more costly to repair,” Michelini said. “I certainly think a sales tax referendum is the better of the options.”

Those other options, as presented by Zoephel Wednesday, include creating a separate taxing district for businesses and using that money to pay for roads, and asking residents to approve a referendum designating Montgomery a home rule community.

Four of the five trustees at Wednesday’s meeting agreed with the sales tax plan, with Trustee Andy Kaczmarek offering the dissenting opinion. He said higher sales tax is not a guarantee of more money, and pointed to other communities that have seen a drop in that revenue source.

Montgomery’s June sales tax figures, the latest available, show a drop of six percent below budget expectations, Zoephel said. But May’s figures were three percent higher than projections, he pointed out.

“(The decrease) is not a trend we want to see,” Zoephel said. “Hopefully it’s just a little blip.”

Trustee Stan Bond was not at Wednesday’s meeting, but he has previously suggested that raising the sales tax may keep people from other communities from shopping in Montgomery. One of the village’s draws, he has said, is its low sales tax rate, in comparison to its neighbors.

Trustees plan to vote on the referendum at their Sept. 26 meeting. Trustees Matt Brolley, Pete Heinz, Denny Lee and Bill Keck gave their support to the plan on Wednesday.

“A sales tax referendum is the only viable alternative,” Keck said. “We put it to the residents, and non-residents will contribute to it also. It’s the best alternative by far.”

“Let the residents decide,” Heinz agreed. “It’s the best way to do it. If they vote it down, they vote it down.”


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