A Home Rule Sales Tax, a Local Motor Fuel Tax, an Alcohol Beverage Tax, a Municipal Electricity Use Tax, a Municipal Utility Tax, and a Municipal Use Tax were created as revenue alternatives, Elgin City Manager Richard Kozal said.
The city council asked staff to look at those alternatives to see if increasing any would help avoid a property tax increase next year.
Kozal said Elgin is already at the maximum level of return for the Municipal Electricity Use Tax, Municipal Utility Tax, and Municipal Use Tax.
Currently, the Home Rule Sales Tax is 1.5%. The amount is lower than Carpentersville, at 2%, but higher than West Dundee, East Dundee, Algonquin, and Hoffman Estates. The tax is 1% in those communities.
“These are our neighboring competitors,” Kozal said. “Many of these potential revenue streams have the ability of pushing people to other communities if they want to save money.”
Kozal said Elgin is competitively positioned among other communities.
Increasing the sales tax would help boost revenues, but retailers would likely want to weigh in on any potential increase, Kozal said.
Elgin has the highest Local Motor Fuel Tax among surrounding communities. The current tax is 4 cents. “If there’s any one area that people shop literally by the pennies, it’s with gas stations,” Kozal said.
Alcoholic Beverage Taxes are imposed differently in other communities. Some have a food and beverage or packaged sales tax. In Elgin, there’s a 3% tax on alcohol sales consumed on premises only.
“I think an important point here is when we talk about doing increases here, a number of these increases wouldn’t be enough to do us much good,” Mayor Dave Kaptain said.
If we do some of the other taxes, “people are going to shop in other places,” Kaptain said. Property taxes are more stable, he said.
Management Analyst Giovanni Jungo provided an example of an actual property tax to explain how much the average homeowner would pay. The three-bedroom, two-bath westside home was assessed at $253,722 in the tax year 2024, payable in 2025.
The property owner paid $6,128.10 to nine taxing bodies. Elgin’s share was $1,108.41, or 18% of the bill, Jungo said. The amount is for the general fund and public safety pensions.
If that property is assessed at the same amount in 2025, for taxes payable in 2026, Elgin’s share of the tax bill would go up to $1,258.91, a $150.50 increase.
Whether or not the city increases the property tax levy, the pension levy would go up slightly due to pension obligations.
The largest amount of the tax bill, $3,916.39, went to School District U-46.
Kaptain said the Kane County Clerk is opening a satellite office in Elgin, where residents can ask questions about their tax bills.
The city council is expected to approve the budget next month.
Gloria Casas is a freelance reporter for the Elgin Courier.
