The Mt. Prospect Village Board has tentatively approved a proposal that would exempt other units of local government operating within the village from paying municipal utility taxes.
“Is it good public policy for one unit of government to tax another?” Mt. Prospect Finance Director Brian Caputo said at Tuesday night’s Committee of the Whole meeting. “I don’t think it is.”
A proposed ordinance exempting the tax is expected to go to the board in late June or early July. Part of the reasoning behind the measure, Caputo said, is that charging a utility tax of tax-supported institutions, such as schools and the Park District, is a form of double taxation of Mt. Prospect residents.
The principal beneficiaries of the exemption would be school and park facilities in Mt. Prospect that pay electric, natural gas and telephone bills. The exemption would apply only to utility usage in Mt. Prospect; the governmental units generally overlap into other communities.
Caputo estimated the annual revenue loss to the village at $27,000. That figure was based on a survey of eight major school and park district facilities that would qualify for exemption. Caputo said there were other governmental units in the village that qualify, but their impact on revenues would be minimal.
The action was prompted by a request from Elementary School District 59, and came at a time when the village is considering a restructuring of its utility tax rate on electrical usage.
Gov. Edgar in December signed into law a deregulation of the electric industry that will guarantee a 15 percent reduction in electric rates for consumers as of Aug. 1.
Since current utility taxes are based on gross receipts of the utility company, lower rates would mean a revenue loss to the village.
To compensate, Mt. Prospect and other northwest suburbs that levy utility taxes are considering taxing the kilowatt hours used during the month. The new rate structure is intended to be revenue neutral, meaning the dollar amount paid by residents would not go up, officials said.
