The Lake Zurich Mayor and Board of Trustees approved a half-cent sales tax hike on Sept. 3, bringing the town’s municipal sales tax to 1 %.
The hike comes after the state passed a measure in August allowing non-home rule communities to raise sales tax to 1 % without a vote. A vote had been planned for November, but village officials asked to remove that from the ballot.
Village leaders say the tax revenue should save money for residents’ future water bills as visitors pay for 40 % of sales tax and the revenue will go toward paying for the costly Lake Michigan water tie-in, which will be paid for in part by water rate hikes.
“In 2028 we will begin paying off the debt service then going on for 30 years based on the estimated total cost of the project at $154 million,” said Village Manager Ray Keller. “With the sales tax rate increase proposed tonight … this will eventually cover about a third of the debt service now, allowing us to reduce the scheduled rate increase down to two-thirds of the debt service.”
The rate hike brought no opposition from the board or from the community, which has been largely supportive of the water project. The Board voted to officially join the Central Lake County Joint Action Water Agency — the collective communities that share costs of piping in Lake Michigan water — this year, though village leaders had been considering a Lake Michigan tie-in since 1981, but after 2000 the move became inevitable with new regulations.
That year, safe drinking water regulations lowered acceptable radium levels, meaning that for the past 24 years, the town has paid to remove and contain the naturally occurring radioactive element. In March, as the trustees prepared to vote on joining the CLCJAWA, Public Works Director Mike Brown said using Lake Michigan water would be the cheapest, safest route for local drinking water.
But that path won’t be cheap. With a massive price tag to cover the start-up costs of construction and infrastructure, residents are already paying higher water costs, even as village leaders search for money elsewhere.
Water rates went up in January, as last year the board approved a new fee schedule that will increase every January through 2028 to begin paying down debt before it becomes due. The half-cent sales tax hike will bring down those water rate hikes a bit.
Even without the Lake Michigan project, the sales tax hike could have happened anyway.
The Lake Zurich water project aside, the state’s go-ahead for local sales tax hikes has proven popular across the area.
“The Village of Kildeer has indicated they’ll be increasing their sales tax rate and the Village of Deer Park has indicated they’ll be indicating their sales tax rate,” Keller told the Board.
Board Attorney Scott Uhler confirmed this and added that most communities are at least eyeing a rate hike.
Jesse Wright is a freelance reporter for Pioneer Press.