Sleepy Hollow to vote on sales tax bump

Todd Stroger's successful push for a 1-percentage-point sales tax increase in Cook County continues to drive controversy more than three years after he first proposed it.

There has been no such firestorm in Sleepy Hollow, where the village board is asking voters to approve a quarter-percentage-point sales tax increase in November.

The increase, if approved, would push the sales tax rate in the village from 7.5 percent to 7.75 percent the same as the rate in the Kane County portion of Elgin and lower than the rates in Carpentersville, West Dundee and the Kane County portion of East Dundee.

Unlike all of those towns, Sleepy Hollow cannot raise its sales tax rate without voter consent because it does not have home rule status gained through voter approval or when a community's population exceeds 25,000.

Sleepy Hollow officials say the increase would help them plug a budget gap originally projected to reach about $40,000 this fiscal year. In a close vote, the board in September voted to cut one night police position, but officials say that move would save only about $18,000 this year.

“The shortfall is due to decline in revenues from the state, so it would definitely be a help," Village President Stephen Pickett said of the proposed tax increase. “It's not going to eliminate by any means the total deficit."

Sleepy Hollow has watched state income tax revenue, a major source of revenue that is shared with the state, drop from more than $380,000 in the 2007-08 fiscal year to less than $330,000 budgeted last year. The village has budgeted $320,000 this year.

Sales tax revenue has actually increased in recent years because of the opening of a strip mall along Route 72 and an agreement with Elgin to share revenue from some Randall Road businesses. Sales tax revenue rose from about $34,000 in the 2007-08 fiscal year to almost $43,000 last year.

Village officials project sales tax revenue will rise to more than $64,000 this year, and the increase would add an estimated $3,600 to $4,000 to that. The amount is so small because the village has only about eight businesses.

Before deciding to put a sales tax increase on the ballot, Sleepy Hollow trustees also discussed a property tax increase referendum. While they decided against it for the time being, the measure could be revived if the sales tax hike fails.

“It probably would get more consideration ... but if this referendum doesn't pass, it's going to be difficult to get the property tax referendum through," Pickett said.

If the sales tax increase passes, it will take effect in July, according to the village.