2019 Referendum

OPTIONS TO ADDRESS $1M+ ANNUAL BUDGET SHORTFALL 

With the November 6th General Election behind us, the home rule question presented by the Village Board to the residents of Lemont did not pass.  We thank all the residents that took the time to vote, and as we move forward, the Village Board and I will continue to work in the best interest of the Village of Lemont.

 

Through the process of the home rule referendum, we proceeded to inform and communicate our financial shortfall to our residents. It gave us the opportunity to have a great deal of meaningful discussions with many of you and we appreciate all the questions and comments we received from our residents. A lot of the discussions that took place with residents centered around our financial shortfall and seeking to get a better understanding of it, as well as the impact to the Village should this revenue shortfall not be replaced. We expressed the impact to our roads, alleys, utility systems, other capital projects and our overall quality of service to our residents and businesses. 

 

Overall, the Village has been experiencing a shortfall in state shared and other revenue streams which has caused the Village to reduce personnel and defer capital improvement projects over the last several fiscal years.  During the current fiscal year, we have further reduced personnel, reduced our road repair program and eliminated our general government capital equipment replacement program, all while continuing to pay down our debt.

 

In early preparation for fiscal year 2020, we once again project over a million-dollar shortfall which will cause another year of deferring our capital obligations if no replacement revenue is secured.  The Village needs a new and stable revenue stream that can be relied upon to cover our existing and ongoing capital needs.  The continued deferment of our capital improvement programs will restrict our ability to provide our core services and maintain quality of life standards that our residents and businesses come to expect.      

 

The Village Board and I have discussed multiple options to obtain the revenue streams needed to fund our capital needs.  The first option was the home rule referendum.   Home rule authority would have provided the ability to raise enough revenue to resolve our ongoing deficit while spreading most of the financial burden to non-residents and industry (primarily trucking fees which we currently do not have the authority to do so as a non-home rule community).  It also would have provided enough revenue to eliminate certain local fees, specifically the vehicle sticker.  However, home rule’s broad authority raised concerns for residents on its utilization, including its use by future boards and administrations.  As a result, home rule is no longer a current option to raise revenue or eliminate existing local fees. 

 

Other options available to the Village include presenting a referendum question to increase our property tax levy to bring in additional revenue or issue debt for capital projects.  While the Village’s tax levy is less than 7% of residents’ tax bill, the overall property tax burden on Village residents is significant. Increasing the Village’s property tax levy to cover debt or raise revenue would compound this problem and places the burden solely on Village residents.   While issue specific referendum questions may also be considered for larger one-time projects in the future, first and foremost the Village needs a consistent and reliable revenue stream to put towards the growing list of the Village’s core obligations.  As a result, the Village Board has decided against the tax levy/debt option at this time based on overall feedback we have received from tax paying residents. 

 

One option proposed by the Village Board is adding a non-home rule sales tax of 1% on most purchases within the Village excluding medicine and groceries.  This 1% sales tax question will be presented to Village residents as a referendum question on the ballot at the April 2, 2019, Consolidated General Election.  As always, we look forward to your input regarding this option.  The sales tax would be the consistent and reliable revenue stream needed to adequately fund our capital needs and will be devoted solely to those needs.  By focusing on an increased sales tax and not taxes borne 100% locally such as property taxes or significant increases in other local fees, we ensure non-Village residents also contribute to the funding.   If the referendum in April is passed, the new revenue stream would provide enough revenue to plug our deficit without the need to drastically increase other local fees/taxes.

 

If the proposed 1% sales tax referendum fails, the Village Board and I will have to evaluate other options in order to fund our capital requirements.  These revenue options include significant increases to our local fee structure that impacts all residents, including significant increases in our vehicle sticker program and substantial capital fees added to our water and sewer bills.  Unlike the 1% sales tax option, all the alternative revenue options place the tax burden solely on Village residents and property owners.  Below is a chart showing the past, current and future options to fill the $1 million deficit, and the estimated impact on residents with each option.    


 Revenue Options  Funding Sources Estimate Resident
Funding %
Home Rule Referendum
(Nov. 6, 2018 past election - failed)
*Sales Taxes (non-grocery,
non-medicine)
~ 30% of the tax burden
borne by Village residents/
property owners;

(70% borne by non-Village
residents)
Non-Home Rule 1% Sales Tax Referendum
(April 2, 2019 Consolidated Election)
*1% Sales Taxes (non-grocery,
non-medicine)
~ 50% of the tax burden
borne on Village residents/
property owners;

(Other 50% borne by non-Village residents)
Significant Local Fee Increase
(If Referendum Fails)
*Significant Increase in Local Fees and Taxes:
     - Increased amount and
       migration to annual vehicle
       sticker fee program
     - Capital fees added to our
       water and sewer bills
*Other local fee increases
100% of the tax burden
borne by Village residents/
property owners
Real Estate Referendum -
Debt Issuance and/or
Limiting Rate Increase
(If Referendum Fails)
*Real Estate Property Tax Increase 100% of the tax burden
borne by Village residents/
property owners 
 

This is certainly not a discussion that we wish to have, but it’s our obligation to continue to invest in our infrastructure while providing core services for our residents and businesses.  The Village Board will officially authorize the question to appear on the ballot at a Special Board Meeting on January 8, 2019. 

The Village will be maintaining this page on our website for referendum information including a detailed listing of capital projects and information on the Village’s finances.   More information will be posted over the next couple of months and the Village will also schedule an informational meeting.

- Mayor John Egofske