Elmhurst Eyes Tax Hikes To Cover Debt

ELMHURST, IL — At current tax levels, Elmhurst doesn't expect to get enough money next year to cover its debt payments for stormwater projects. So it is considering tax increases to make up the difference.

According to a city memo Thursday, the city has identified no sources of money to pay back bonds issued in 2018 and 2019. In the last couple of years, the city transferred money from its main account, which pays for day-to-day operations, to cover the extra debt. That's because decisions on the issue were stalled during the pandemic, the memo said.

City officials issued the memo for the City Council's Finance Committee's meeting on Monday. They presented three ideas for increasing income:

• Property tax levy — Elmhurst Public Library's debt for its new building is ending, so the city could increase its property tax levy by $1.3 million, which could be transferred to the stormwater account to cover debt payments. With the library's tax levy dropping, the extra money for the city would mean no increase in the tax levy for property owners, according to the memo. "Property tax is a stable revenue source, has a low administrative cost, and is broadly based," the memo said.
• Home rule sales tax — The city's home rule sales tax of 1 percent has paid for the majority of the stormwater fund since its creation. New home rule sales hikes must be made in 0.25 percent increments. Under a proposal, the city could increase its sales tax rate to 1.25 percent, raising nearly $1.7 million. Forty percent would go to the stormwater account, instead of the existing 25 percent. "The increase would allow the Stormwater Fund to cover the outstanding debt payment and have enough to pay a portion of the proposed capital expenditure budget," the memo said. "Sales tax is regressive, fluctuates, has low administrative costs, and is partially paid by non-residents."
• Stormwater fee — Across Illinois, 29 towns, including 16 in the suburbs, charge stormwater fees to property owners. They are assessed in different ways. Some are flat. Others are based on the amount of impervious surface such as concrete on a property. Properties with more impervious surfaces generally contribute more to flooding. If the city used the simplest, fixed rate method, it could charge a monthly amount of $6 for houses and $12 for other property types, according to the memo.