G-790 - 10/25/2005 - TAX - Ordinances Supporting DocumentsItem
AGENDA ITEM
Regular Board of Trustees Meeting
of
October 25, 2005
SUBJECT: Extension of Utility Tax
FROM: Darrell Langlois
BUDGET SOURCE/BUDGET IMPACT: Revenues are currently utilized in the General Fund
RECOMMENDED MOTION: I move that the Village Board adopt Ordinance G-790,
"An Ordinance Further Amending Ordinance G -470 Establishing a Utility 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, 2006.
Back $zround /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, 2005.
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).
Last saved by Default J MORMuttaxextension2005 doc
Last printed 10/19/2005 1 32 PM (66
Neither the telecommunications tax nor electricity tax carry a sunset provision with it; 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 Corporate Fund and are
expected to amount to approximately $320,000 in 2005.
When the 2005 -2009 Five -Year Plan was completed, it was projected that these taxes were
needed at the maximum rate of 5% for the duration of the planning period. Although the Village
Board has not yet considered either the 2006 Budget or 2006 -2010 Five -Year Financial Plan,
action on this item is requested at this time in order to give the required notice to the utilities of
the Village's intent to continue imposition of these taxes. If during the budget process the Board
decided to adjust the rate of tax, the appropriate adjustment could be processed at that time,
resulting in implementation of a new rate approximately 90 days after that decision is made.
Recommendation:
Due to the projections contained in the 2005 -2009 Five Year Financial Plan, it is recommended
that the utility tax be extended at the 5% rate through December 31, 2006.
Please let me know if you have any questions or comments.
Last saved by Default J \WORD \uttaxextension2005 doc
Last printed 10/19/2005 1 32 PM