Road Worriers: Sales Tax Referendum Aims to Patch Up Holes

Crumbling roads, rising costs to maintain them and not enough funds to complete the job have Lake Zurich leaders worried.

Their solution is to ask voters to approve a 0.5 percent sales tax referendum—which will bring in about $2.2 million in annual revenue. Village officials say the referendum is the least expensive option.

"We believe an extra one-half percent protects the property values of the residents of Lake Zurich," said Al Zochowski, village finance director.

The hope is that the sales tax referendum will pave the way for smoother streets and maintain curb appeal of homes.

The complex referendum wording that will appear on the Nov. 2 ballot asks for a yes or no vote. It amounts to a much simpler question: Do residents want to pay about $50 each per year to have their roads properly maintained? The estimate is based on people's spending habits at local businesses.

The sales tax increase would spread the burden to people outside the community who use Lake Zurich's roads when they shop here, said Bob Vitas, the village administrator.

"Let other people help pay for roads, which they are using," he said. "There's no rocket science to this. We did talk to retailers in Lake Zurich, who were willing to share information with us. We learned that for some, as much as 50 percent to 75 percent of their business is from outside the village. Others, just 25 percent."

"If a family goes to Jewel and spends $130 a week on groceries, what's another $2 or $3," said Dale Perrin, executive director of the Lake Zurich Area Chamber of Commerce. "The impact on our daily lives, I think, will be minimal."

The impact on local business also would be minimal to none," said Perrin. "I don't see any detriments if it passes,." he said. However, he cautioned that it depends on if the village has done its due diligence and that neither he or the public have the resources to quantify that.

If the referendum passes, the tax increase would not take effect until July 2011. The village would begin to receive funds from the tax, which can only be spent on road repairs, in September or October of 2011.

How'd it happen?

Lake Zurich is a built-out community that no longer is realizing the growth it has over the past 30 years, Vitas said.

Fees the village garners from permits that once totaled well more than $1 million now bring in just $350,000 annually. The village also divides motor fuel tax funds it receives across various subdivisions to keep roads maintained.

"Gone are the days in Lake Zurich when you are going to see any rapid growth," Vitas said.

The road improvement plan was last fully successfully completed in 2008 and costs about $1.5 million annually. For the past two years, only $350,000 has been available from various funding sources to maintain the roads. At the same time, cost of materials to complete road work has risen.

"The disturbing trend we started to see is our net asset base was falling year after year," said Bob Vitas, village administrator. "We as a community were not investing back into the community everything that has to be maintained."

The village has 175 pieces of equipment to maintain and has not had a capital improvements plan in place since 1995.

"I can't imagine a private corporation not having a plan to maintain its facilities and improvements," Vitas said, adding new preliminary capital improvements plan was recently approved by the village.

Before village officials determined the sales tax referendum was the right path, many cuts were made.

Over the past few years, 23 staff positions or 18 percent of the workforce was eliminated, Vitas said. Salaries were frozen, and health costs to village employees were increased. Trees throughout the village and grass were trimmed less frequently or not at all. All of that garnered the village about $1 million, but that still wasn't enough to fund all village services.

The village also compared the tax rates of 20 different communities, Zochowski said.

Lake Zurich's 7 percent rate—bumping up to 7.5 percent if the referendum passes— is still favorable compared to other communities in the area.

Schaumburg has a 10 percent rate, Long Grove's rate is between 8.5 percent and 9 percent depending upon the location of the business and Deer Park also has a 7 percent rate, but is requesting a 0.25 percent increase via referendum. Lincolnshire also is seeking to increase its sales tax rate via referendum in November from 7 percent to 7.5 percent.

Other Options

Should the referendum fail, residents could see other more expensive options.

The village could increase fees for services, add a food and beverage tax, impose neighborhood special assessments for capital projects, require vehicle stickers or raise utility taxes from 2 percent to 5 percent.

"I am not in favor of a utility tax imposed without asking," Village President Suzanne Branding said. "I am in favor of the referendum because we ask the voters what they want. Sales tax will cost residents less than utility tax and it is repealable."

The utility tax currently raises about $500,000 annually. It would cost local industrial businesses a heavy burden because of the amount of utilities they use.

Road Maintenance Plan

The village has a 10-year road maintenance plan that is designed to have the streets throughout town resurfaced after their 20-year life expectancy, said David Heyden, public works diretor/village engineer. Resurfacing roads costs much less than replacing them.

Roads in areas throughout town are resurfaced first at the inner most portion of a subdivision. That's so trucks don't wear the newly paved roads when they return for resurfacing the outer portions.

Utilities companies are notified in case they can make improvements before the repaving and at a lesser cost as well, Heyden explained.

Creating Awareness

The village will hold a 7 p.m., Thursday, Oct. 7, town hall meeting about the referendum at Village Hall. All village board members and staff will attend. Residents who have any questions can call 847-438-5141.

The Fall 2010 edition of Newsline, the village newsletter, first detailed the referendum including a message from Village President Suzanne Branding. 

The village also mailed brochures to every resident. A press conference was held about the referendum in late August to inform members of the media about it. Another flyer also will be mailed. The printed materials cost the village about $2,500 and the work to produce them was done largely by interns, Vitas said.

Additionally, village officials have met with homeowners associations in town and hosted an informational meeting about the referendum at the Lions Club Den. 

The village also hosted public forums at the Ela Are Public Library and Sarah Adams Elementary School in September. Village officials gave two-hour presentations and handed out flyers, but only a handful of residents attended. 

Information is posted on the village website at the referendum tab. Residents can also provide their comments on the site.