G-1200 - 11/23/2021 - TAX-UTILITY - Ordinances Supporting Documents ITEM 6.E.1
BOARD OF TRUSTEES MEETING
VII IAcl 01 SAMUEL E. DEAN BOARD ROOM
OAK B _9 , K BUTLER GOVERNMENT CENTER
1200 OAK BROOK ROAD
OAK BROOK, ILLINOIS
630-368-5000
AGENDA ITEM
Regular Board of Trustees Meeting
of
November 23,2021
SUBJECT: Extension of Gas Utility Tax
FROM: Jason Paprocki, Finance Director
BUDGET SOURCE/BUDGET IMPACT: Revenues are currently utilized in the General Fund.
RECOMMENDED MOTION: I move that the Village Board adopt Ordinance 2021-TX-UT-
G-1200, "An Ordinance Further Amending Ordinance G-470, Establishing a Utility Tax Within
the Village of Oak Brook,Illinois"which extends the imposition of the utility tax on natural gas
and electricity at the rate of 5%through December 31,2022.
Back$round/History:
The Village first imposed utility taxes on various utilities in 1991. When the tax was originally
imposed, the tax was assessed on electric, natural gas, and telephone services within the Village.
The enabling utility tax ordinance included a one-year"sunset"provision so that the Village Board
could review both necessity and the rates of tax annually. The tax has been re-imposed each year
thereafter(at varying rates), and the current ordinance imposing this tax expires on December 31,
2021.
In the mid-1990's, the Village stopped assessing utility taxes on telephone service and instead
implemented a telecommunication tax,which effectively resulted in the Village receiving taxes on
long distance service instead of just local telephone service. Furthermore, due to deregulation of
the electric industry, beginning in 1998 the Village began implementation of an "electricity tax",
which is a ten-tiered tax rate structure that resulted in the phasing out of the gross receipts utility
tax (at the present time the rates are designed to approximate a 5% gross receipts tax).
Neither the telecommunications tax nor the electricity tax carries a sunset provision; thus, as a
practical matter, extending the sunset date only impacts the current 5% utility tax on natural gas.
Receipts from the utility tax on natural gas are deposited in the General Fund and are expected to
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amount to approximately $232,000 in 2021. Projected receipts for 2022 are expected to be
consistent with recent averages at$220,000.
When the 2021-2025 Five-Year Plan was completed, it was planned that these taxes were needed
at the rate of 5% for the duration of the five-year period. Although the Village Board has not yet
approved either the 2022 Proposed Budget or 2022-2026 Proposed Five-Year Financial Plan,both
documents were prepared with the assumption the 5% gas tax continues into the future.
Recommendation:
I recommend the Village Board adopt Ordinance 2021-TX-UT-G-1200, "An Ordinance Further
Amending Ordinance G-470, Establishing a Utility Tax Within the Village of Oak Brook,
Illinois"which extends the imposition of the utility tax on natural gas and electricity at the rate
of 5%through December 31, 2022.
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