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G-1173 - 11/24/2020 - TAX-UTILITY - Ordinances ITEM 6.C.2 BOARD OF TRUSTEES MEETING VILLAGE OF SAMUEL E. DEAN BOARD ROOM OAK BR , K K . BUTLER GOVERNMENT CENTER oz� 1200 OAK BROOK ROAD OAK BROOK, ILLINOIS 630-368-5000 AGENDA ITEM Regular Board of Trustees Meeting of November 24, 2020 SUBJECT: Extension of Gas Utility Tax FROM: Jason Paprocki, Finance Director J BUDGET SOURCE/BUDGET IMPACT: Revenues are currently utilized in the General Fund. RECOMMENDED MOTION: I move that the Village Board adopt Ordinance 2020-TX-UT- G-1173, "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, 2021. Back2round/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, 2019. 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 RG BOT AGENDA Page 1 amount to approximately $209,000 in 2020. Projected receipts for 2021 are expected to be consistent with recent averages at $220,000. When the 2020-2024 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 2021 Proposed Budget or 2021-2025 Proposed Five-Year Financial Plan,both documents were prepared with the assumption the 5% gas tax continues into the future. Action is needed at this time to give notice to Nicor of the Village's intent to continue or discontinue the imposition of these taxes. If at any time the Board decides 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: I recommend the Village Board adopt Ordinance 2020-TX-UT-G-1173, "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, 2021. BOT AGENDA Page 2 THE VILLAGE OF OAK BROOK COOK AND DUPAGE COUNTIES, ILLINOIS ORDINANCE 2020-TX-UT-G-1173 AN ORDINANCE FURTHER AMENDING ORDINANCE G-470, ESTABLISHING A UTILITY TAX WITHIN THE VILLAGE OF OAK BROOK, ILLINOIS GOPAL G. LALMALANI, Village President CHARLOTTE K. PRUSS, Village Clerk JOHN BAAR PHILIP CUEVAS MICHAEL MANZO MOIN SAIYED EDWARD TIESENGA ASIF YUSUF Village Board Published in pamphlet form by authority of the President and the Board of Trustees of the Village of Oak Brook on this the 24th day of November, 2020 Ordinance 2020-TX-UT-G-1173 Further Amending G-470,Utility Tax Page 2 ORDINANCE 2020-TX-UT-G-1173 AN ORDINANCE FURTHER AMENDING ORDINANCE G-470,ESTABLISHING A UTILITY TAX WITHIN THE VILLAGE OF OAK BROOK,ILLINOIS WHEREAS,on July 23,1991 the Village Board adopted Ordinance G-470 entitled"An Ordinance Establishing a Utility Tax Within the Village of Oak Brook,DuPage and Cook Counties,Illinois";and WHEREAS,certain changes,clarifications and extensions of Ordinance G-470 have been made from time to time by the Village;and WHEREAS,it is in the best interests of the Village of Oak Brook to again extend the imposition of said tax through and including December 31,2021. NOW,THEREFORE,BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF OAK BROOK,DU PAGE AND COOK COUNTIES,ILLINOIS as follows: Section 1: Recitals. The foregoing recitals are hereby incorporated into,and made a part of,this Ordinance as the findings of the President and Board of Trustees of the Village of Oak Brook. Section 2: Effective Date of Tax. Section 5-1-5,"Effective Date of Tax,"of Title 5,"Municipal Taxes,"of the Village Code is hereby amended further to read as follows: 5-1-5: EFFECTIVE DATE OF TAX: The tax provided for in this chapter shall be based on the"gross receipts",as herein defined,actually paid to the taxpayer for services billed on or after October 1,1991,through and including December 31,2021. Section 3: Taxpayer's Report Required. Section 5-1-6, "Taxpayer's Report Required,"of Title 5,"Municipal Taxes,"of the Village Code is hereby amended further to read as follows: 5-1-6: TAXPAYER'S REPORT REQUIRED: B. On or before the last day of every month thereafter,each taxpayer shall make a like return to the village treasurer for the month preceding.The last such return shall be for the month of December 2021,which shall be due January 31,2022. Section 4: Severability. If any provision of this Ordinance or part thereof is held invalid by a court of competent jurisdiction,the remaining provisions of this Ordinance shall remain in full force and effect,and shall be interpreted,applied,and enforced so as to achieve,as near as may be,the purpose and intent of this Ordinance to the greatest extent permitted by applicable law. Section 5: Effective Date. This Ordinance shall be in full force and effect from and after its passage,approval,and publication in the manner provided by law. [SIGNATURE PAGE FOLLOWS] Ordinance 2020-TX-UT-G-1173 Further Amending G-470,Utility Tax Page 3 APPROVED this 24th day of November 2020. Gopal G.Lalmalani Village President PASSED this 24th day of November 2020. Ayes: Trustees Baar,Cuevas,Manzo,Saiyed,Tiesenga,Yusuf Nays: None Absent: None ATTEST: Of O-IA- 6,90 ® Charlotte K.Pruss `rG a Village Clerk 9C�COUNT4 •���\