The village of East Dundee is creating a new 2 cents gas tax and increasing water rates by 5% to help fund capital improvement projects, specifically its new lead service line replacement program.
Surrounding communities already have a gas tax, Village Administrator Erika Storlie said.
The tax in East Dundee goes into effect on April 1, 2025. The village estimates it could generate $250,000 a year in new revenues.
The village’s $24.3 million budget includes the gas tax, increasing the tax levy by 5% and hiking water rates by 5% and sewer rates by 3%.
While the tax rate is increasing, residents will see a minimal increase in property taxes because the tax base is expanding by $23.2 million with the expiration of the Prairie Lakes tax increment financing district, officials said.
Officials said the water rate increase is necessary to help pay for six capital improvement projects, including renovating Well No. 6, needed within a few years. A study on water and sewer rates showed East Dundee should increase the water rate by 10% over the next eight years to afford the projects. The sewer rate would increase by 3% each year over that period.
Trustees were reluctant to increase the water rate so much because of the financial impact on residents. Instead, the water rate will go up by 5% in 2025.
Village officials say they will evaluate how much the gas tax generates and whether it’s enough to stave off a recommended 10% percent water rate increase in 2026.
“We were hovering between 5 and 7 (percent). We were comfortable with 5% then we will reevaluate next year based on where the gas tax comes in,” Storlie said at the Village Board meeting Monday.
“I have to thank staff for the time they put into this,” said Trustee Sarah Brittin. “It’s nice to have a balanced budget.”
Gloria Casas is a freelancer.
