City Council, City of Peoria

Winner of “Most Ill-Timed Revenue Proposal”: Van Auken’s 5% Utility Tax Idea

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The Journal Star reported Thursday that Second District Councilwoman Barbara Van Auken has an alternative plan to a property tax increase:

Another option for raising revenue comes from Van Auken, who wants to replace the $6-a-month garbage fee with both a 5 percent utility tax and 5 percent franchise fee on water bills.

“My goal in this budget is to get adequate police and fire protection for the 2nd District and to replace the garbage tax with a source that is more fair and equitable,” Van Auken said. “I want to see where my colleagues are on it. The mayor and I have discussed it, and he has spoken favorably of the idea because it spreads the cost throughout the community – not just the residents who pay the garbage tax and not just the residential and commercial, as it is with the property tax.”

I appreciate “outside-the-box” thinking as much as the next guy, but honestly, I can’t think of a worse time to suggest this revenue-raising idea. Surely Van Auken is aware that electricity rates are going up 55% in January. Is proposing the city tack on another 5% a good idea right now?

I’m going to guess that the logic behind this is that, since it would apply to not-for-profits, businesses, and residents, the cost would be spread out more and thus, coupled with the 5% franchise fee on water bills, this whole plan would be cheaper for residents than the current $6 per month garbage fee. Maybe, but I’m not buying it until I see the numbers — with and without not-for-profits included.

Why without not-for-profits? Because we all know the chances of a tax on not-for-profits passing are about 10,000 to 1. Every health-care provider, every church, every fine arts organization, every college and university, and every charity — to name just a few of the institutions affected — will be out in force to put the kibosh on that idea. Of course, there will be exceptions, but I predict if this idea starts being pushed, the push-back will be enormous and the city will back down.

I’ve e-mailed Ms. Van Auken asking for clarification on her plan; when she writes back, I’ll post her response as a follow-up to this post.

6 thoughts on “Winner of “Most Ill-Timed Revenue Proposal”: Van Auken’s 5% Utility Tax Idea”

  1. The utility tax/franchise fee would only be placed on water only – no other utility. Currently, Illinois American pays nothing for use of the public right-of-way, however, damages it the most (ie. water leaks, etc.). Approximately 65% of the the properties pay 100% of the real estate tax. This approach would make the non profits particpate in the cost of providing needed services.

  2. I agree with Rest of the Story. And i’s not “ill-timed” because this is the time of year in which the city ALWAYS discusses and approves it’s budget. Furthermore, loyal readers of MY blog recall Councilwoman Van Auken and others mentioning this and several similar ideas BACK IN MAY.

    http://tinyurl.com/yd3nog

    *ahem*

  4. Yes, Billy, I remember your post on that. But notice it was called a “fire service fee” then and the method of collection was not clear. When I saw “utility fee” listed as separate from a “franchise fee,” it led me to believe these were two different entities collected two different ways.

    The quote from the paper was that they were going to replace the garbage fee with “both a 5 percent utility tax and 5 percent franchise fee on water bills.” Now there are two ways to read that sentence. One is to assume the prepositional phrase “on water bills” refers to the utility tax and the franchise fee, and the other is to assume it refers only to the franchise fee. When I read it, it sounded to me like only the franchise fee was going to be collected via the water bill. So, let’s just say I misinterpreted it. 🙂 My fault.

    Thanks for the link, though. It’s a good resource on this issue.

  5. Oh yeah — In the interests of full-disclosure, I should also mention that I work for a church, which is not-for-profit as well. I won’t be voting on anything, of course, but for the purposes of discussion my readers should be aware of that.

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