Before we forget about them and move on to something else, I think we should reflect a minute on the historic taxes passed by the City Council last week.
The first, of course, was a $10 per month increase in the refuse fee that will appear on our utility bills. People disagree about how much money that will actually bring in, but assuming we have more than 50,000 households paying the fee, it has to be somewhere around $6 million a year.
It’s important to remember that we were already paying this tax through our property taxes, plus the $2.50 that was already on the utility bill. Call it whatever you want, but this was simply the amount of money the city needed to cover a shortfall in operating expenses, due in part to built in wage inflation and our unwillingness to deal with the Prairie State electricity situation.
By making it sound as though we were finally paying for garbage collection, they avoided the politically unpopular act of raising property taxes, which they could just as easily have done, and made it actually sound like the responsible thing to do.
By putting it on the utility bill, they made it sound as though the fee was more “transparent” and responsible, in that only the people producing the trash were being billed to take it away. Again, that is a little misleading. Unlike water and electricity, garbage is not a utility. People won’t be paying for the amount of garbage they each produce, which most retired folks and people deep into recycling would actually prefer.
The reason such things are in the property tax is to make the cost progressive. Businesses, for example, pay for leaf pickup, even though they don’t use it, to ease the burden on lower income folks. In fact, paying for the amount of leaves you put in the street would not only be fairer, but might put an end to the silly practice of throwing away all the fertilizer your trees need next year. Just mow them when they’re dry.
Even this relatively small garbage increase, however, will have an impact because more people than ever budget. That $150 per year won’t come out of peoples’ savings, I sincerely hope, but out of whatever discretionary spending they still manage to have. Think of it as 50,000 fewer pizzas or lunches downtown per month. In other words, as much as $6 million a year will flow out of the local economy to cover city operating expenses.
The other tax approved was a 0.50 percent increase in the sales tax, expected to bring in at least $8.5 million a year, and which could sunset in two years, barring a real or manufactured financial crisis requiring it to remain. Pardon me if that sounded cynical.
Two million of those dollars will be used to lower the property tax levy. The rest would be used to lower our debt and rebuild our cash reserves. If the additional income is divided equally between the two tasks, rebuilding the reserves to an acceptable level would take about six years, and $3.25 million in property tax money per year that is currently used for debt service would become available.
Some expressed regret that the sales tax approved was not the original level proposed, 1 percent, so that rebuilding the reserves could be done sooner. However, you’ll recall that much of that 1 percent was not to reduce debt, but to build a capital projects fund to do things like a $40 million reconstruction of the Central Parking facility.
If you listened careful to the sales tax ordinance as it was read, a wise thing to always do, you noticed that the capital projects language was still in there, even though the money for it was not. Again, pardon me if that sounds a tiny bit ominous.
Bill Mego is a freelance columnist for the Naperville Sun.
