Sales Tax Referendum

The Village currently utilizes it’s 0.5% non-home rule sales tax for funding capital improvements.  An increase in the non-home rule sales tax will provide additional funding for annual capital programs and future projects, such as a new Public Works Facility which is currently being designed and is expected to cost approximately $17.6 million.  The additional 0.5% tax is expected to cover a substantial amount, if not all, of the annual debt payment of the new Public Works facility. An increase in the non-home rule sales tax is intended to allow the Village to continue with its current long-term capital improvement plan without any major reductions or delays and without imposing other taxes or fees that would apply only to residents of the village.

Unlike utility taxes or property taxes that only affect residents and local businesses, the non-home rule sales tax is also paid by non-residents who also utilize the Village’s infrastructure.  Increasing the sales tax is intended to include non-residents in sharing the cost of maintaining the Village’s public infrastructure and reducing the potential burden on residents and local businesses.

The Village has reviewed multiple funding options for a new Public Works Facility and has chosen to increase sales tax for the reasons stated.  If the referendum fails, the Village may consider other revenues to raise money for capital funding and projects such as a new Public Works Facility.  These funding sources may include raising the utility tax and telecommunication tax that is included on natural gas, electric and/or cell phone bills.  The Village can also consider a property tax referendum that, if approved, would collect money via property tax bills to fund the Public Works Facility.

The Village is classified as a non-home rule municipality in Illinois.  A non-home rule sales tax is a local sales tax that can be implemented by non-home rule communities if approved by voters.  Currently, the Village has a 0.5% non-home rule sales tax rate.  The Village is proposing to increase the non-home rule sales tax rate by 0.5% to 1.0%, which is the maximum allowed.

The non-home sales tax does not apply to many common items, such as:

• Vehicles and other items required to be titled or registered with the State.
• Food sold at grocery stores that is not prepared for immediate consumption.
• Prescription medicines and nonprescription items claimed to have medicinal value, such as aspirin, cough medicine, and medicated hand lotion.
• Prescription and nonprescription medical appliances that directly replace a malfunctioning part of the human body, such as corrective eyewear, contact lenses, prostheses, insulin syringes, and dentures.

If approved, the non-home rule sales tax rate would increase on July 1, 2024.

If approved, this referendum will cost an extra 50 cents for every $100 purchases of an item that is subject to non-home rule sales tax.

The non-home sales tax does not apply to items such as:

• Vehicles and other items required to be titled or registered with the State.
• Food sold at grocery stores that is not prepared for immediate consumption.
• Prescription medicines and nonprescription items claimed to have medicinal value, such as aspirin, cough medicine, and medicated hand lotion.
• Prescription and nonprescription medical appliances that directly replace a malfunctioning part of the human body, such as corrective eyewear, contact lenses, prostheses, insulin syringes, and dentures.

If approved, the non-home rule sales tax rate would increase on July 1, 2024.

Currently, the general merchandise sales tax rate in North Aurora is 7.5% (consisting of local sales tax and state sales tax).  If the non-home rule sales tax rate is increased by 0.5% to 1.0%, the general merchandise sales tax rate in North Aurora would be 8.0%.  For comparison, the sales tax rates of our local communities are:

• Aurora = 8.25%
• Batavia = 8.0%
• Geneva = 8.0%
• Montgomery = 8.0%
• St. Charles = 8.5%
• Sugar Grove = 8.0%

A North Aurora resident typically pays 4-6% of their total property tax bill (subject to the taxing bodies on an individual’s tax bill) to the Village.  Money received from property taxes are utilized for general operations, employee compensation, police protection, police pension contributions, and other core services.  The property tax levy is not a dedicated funding source for the Village’s Capital Projects fund. The Village uses sales tax revenue as a primary source of funding for the Village’s Capital Projects fund.