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Downers Grove Council to weigh the cost of creating beverage tax

The Village of Downers Grove is considering the prospect of implementing a 1-percent beverage tax.

Discussion of this measure was presented to officials at long-range planning meetings held earlier this summer. Additionally, direction was provided by members of Downers Grove staff to pursue a tax for 2018.

Much like other communities in the region, the Village has been experiencing declining sales and income tax revenues in recent years.

“A decline in revenues in both sales and income tax for the village are estimated to be $1.3 million for Fiscal Year 2017,” said Megan Myles, of the Village Manager’s Office. “To address this decline, the Village has implemented cost-cutting measures to attain a balanced general fund balance for Fiscal Year 2017. Looking to 2018 and beyond, the Village is proposing this tax to replenish the lost revenue from the declining sales and income tax and achieve a balanced general fund balance.”

The 1-percent tax, if approved, would be applied to the purchase price of alcohol, packaged liquor and non-alcoholic beverages for immediate consumption.

Village staff anticipates bringing in $1.5 million in revenue, and it is a revenue that would experience growth over time.

A study of state-reported revenues shows a 4.3 percent annual growth rate at the Village’s drinking and eating establishments over a 7-year period from 2010 to 2017.

If adopted, the tax goes into effect Jan. 1, 2018 with first collections coming in February.

Commissioner Bob Barnett wanted the board to think carefully when gauging whether the Village should implement the tax, so as not to miss any opportunities.

“I think we long-term need to be focused on the idea that our revenue streams are going to be different than they have been in the past, which is what makes this an excellent idea to be considered,” he said.

Nearby Naperville and Lombard have both implemented a 2-percent beverage tax. Like what’s proposed for the Village of Downers Grove, Westmont created a 1.5-percent tax.

The measure is designed to capture growth that is incurring.

What’s more is the State of Illinois is assessing a processing charge, or a 2-percent hold back, on the Village’s sales tax.

“We do have to look at other things and changes in the environment and also challenges in other places,” Mayor Martin Tully said. “I know we ask staff to do more and more with less and less, but eventually you can’t do everything with nothing.”

The matter will be reviewed again by the Downers Grove Village Council at its July 18 meeting.

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