Tax Talk with La Grange Trustees; Consensus Against Amusement Tax on Theatre

La Grange trustees largely shelved the proposed ideas of an amusement tax on the La Grange Theatre or a non-home rule sales tax hike at Monday night’s Board meeting, while mostly accepting the need for the maximum-allowed property-tax increase to continue.

Trustees were holding a workshop to identify for Village staff the attitudes towards potential sources of revenue increases. The 2012-2013 Village budget dipped into deficit spending after the Board shot down a 1 percent utility tax increase in April.

The idea behind an amusement or sales tax was to ease taxes specifically on residents and shift the burden somewhat onto visitors to the Village. Theatergoers and shoppers currently pay only a 0.25% non-home rule sales tax to La Grange, but still require taxpayer-funded services like police protection.

But the amusement tax ran into stiff opposition from the trustees, who cited as reasons the singling-out of a single business for taxing, and potentially damaging an attraction that is a major draw for the downtown and a feeder for other downtown businesses.

“This is just a bad idea,” said Trustee Jeff Nowak. “I don’t see it as good fiscal policy. It affects one business and effects on them a roughly 10 percent tax that could cripple the theatre’s business.”

“The businesses that are in our villages as a result of our theatre… makes that a very critical element of our Village downtown,” added Trustee Bill Holder. “The value proposition there is what drives this and drives people not just to the theatre, but to our downtown.”

Trustee Michael Horvath, who proposed the idea, defended it as “the best of bad options” for relieving property or utility tax increases on residents; Trustee Jim Palermo also expressed interest in further examining the Theatre’s finances to assess the idea’s viability.

But Village President Liz Asperger expressed that “the clear consensus of the Board is not to pursue an amusement tax that would affect this singular business at this time.”

Similarly, the Board decided not to pursue any increase in the Village non-home rule sales tax, which would have to be approved by voters—an unlikely prospect given the current economic climate, Asperger said.

“The thought process would be ‘if we have to, this is an option,’ but at this point in time, we are not proposing to head down that path,” said Asperger.

The other two taxes up for discussion at the workshop were the annual property tax increase of 2.4 percent and the same 1 percent utility tax that was shot down in April.

Trustees mostly concurred on the standard property-tax increase, although Horvath objected to considering any revenue increases without simultaneously or first looking at cutting expenses. (A separate workshop is scheduled for examining expenses.)

The response on a 1 percent utility tax increase, tentatively slated for the 2014-2015 budget, was more mixed. Trustee Mark Langan, who voted for the increase in April, said it was necessary to maintain reasonable reserves to fund infrastructure plans; Trustee Mark Kuchler expressed opposition unless administrative salaries were moved from the water fund to result in a net decrease in water bills.

Horvath said that due to a proposed service-sharing program and other potential cuts, the increase might not be required at all. Nowak said the increase should be saved to fund a major infrastructure overhaul, like redoing the Village’s sewer system.

President Asperger summarized by advising staff that the utility tax increase proposition should be kept as a “placeholder,” but cautioning that “substantial justification for its need as a directive would be required.”