For many years, Oak Park’s village government didn’t spend a lot on routine capital improvement projects like repaving alleys and replacing sidewalks. Budgets were tight and there were not specific revenues streams devoted to the so-called CIP budget.

That’s changed in recent years as the village has added taxes used specifically to fund capital improvements. In fact, as the village board works to finalize its budget for 2020 including a CIP plan, it is considering adding two additional taxes dedicated to capital improvements. 

The multi-year CIP plan, as proposed in the draft budget prepared by Village Manager Cara Pavlicek, includes relatively expensive capital improvement projects needed to update and maintain village infrastructure, such as road construction and building repairs. Projects are separated into four categories: building improvements, fleet replacement, equipment replacement and main CIP (other).

The funds needed to pay for these projects comes from a variety of sources, including the local option sales tax. “Our local option sales tax is 100 percent dedicated into capital,” said Pavlicek. The local option sales tax is also known as the home rule occupation tax.

According to Pavlicek home rule communities in Illinois, such as Oak Park, can levy a sales tax in quarter of a penny increments by vote of the village board. “It’s an additional revenue on top of the sales tax that’s collected by the state of Illinois on general merchandise,” said Pavlicek. In Oak Park, the local option sales tax is 1 percent.

“We also have a local option gas tax that we adopted again locally,” she said. “You buy a gallon of gas, there’s an additional fee on there and that goes to pay for the roads.” The local gas tax is six cents per gallon. 

To create more CIP funding, the village is looking at two new tax streams. The cannabis privilege tax, adopted by the board on Oct. 7, is a three percent tax on the retail sale of non-medicinal marijuana. The revenue collected would be strictly used for capital improvement projects. The three percent tax could generate an estimated $200,000 in revenue. Oak Park does not yet have a retailer licensed to sell marijuana. The cannabis privilege tax is set to go into effect October 2020.

To capitalize on the popularity of services provided by Uber, Lyft and similar companies, the village has suggested a ride-share tax of $.35 per ride. If implemented, the ride-share tax is projected to generate $450,000, which would go toward financing CIP projects. 

Past CIP projects have also been financed through bonds. “The village board, depending on certain projects, have issued bonds to pay for significant capital,” said Pavlicek. 

For previously issued bonds, the village must pay $10.5 million in 2020. Of the $10.5 million debt, $6.2 million will be paid from fees associated with parking, waste and refuse pick up, as well as water and sewer services, while $4.2 million will come from property tax revenue, if the recommended budget is adopted. 

This story has been updated to fix a typo.

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