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updated: 3/9/2018 7:44 AM

Food and beverage tax on tap in Vernon Hills?

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  • AMC Hawthorn 12 Theaters at Hawthorn Mall in Vernon Hills. Amusement taxes on theaters are among several projected revenues that are below expectations.

    AMC Hawthorn 12 Theaters at Hawthorn Mall in Vernon Hills. Amusement taxes on theaters are among several projected revenues that are below expectations.
    Gilbert R. Boucher II | Staff Photographer, 2016

  • Patrons purchase tickets at the AMC theater at Hawthorn Mall in Vernon Hills.

    Patrons purchase tickets at the AMC theater at Hawthorn Mall in Vernon Hills.
    Paul Valade | Staff Photographer, 2015

 
 

Customers could pay a bit more to eat and drink in Vernon Hills this fall if village officials choose to impose new taxes to generate income.

Taxes on food and beverages, and packaged liquor, are on the table as the village considers a $31.3 million spending plan for 2017-18.

Vernon Hills has never imposed a municipal property tax and relies on sales taxes and other revenue to fund day-to-day operations. But with sales tax revenue in the commercial-rich village expected to be nearly flat and a drop in other income sources, such as its share of state income tax and license and permit fees, officials are looking for options.

"We do need to find a way to diversify the village's revenue streams," Finance Director Nikki Larson said.

As part of the ongoing budget review, Larson was directed by the village board to analyze current revenue sources and identify new ones.

Topping the list is a proposal to implement a 1 percent home rule food and beverage tax and a 1 percent packaged-liquor tax applying to restaurants, grocery and convenience stores, and entertainment uses such as theaters, golf courses and bowling alleys where food is prepared for consumption on site or packaged liquor is sold.

According to Larson, the new charges would apply to 150 businesses and generate about $1 million per year once fully implemented. Larson said revenues are down about $579,000 for the current budget year, and the trend is expected to continue.

"That would kind of fill in the void," Trustee Jim Schultz said of the new taxes. Creating a food and beverage tax would be the easiest way to raise funds as it wouldn't necessarily be a direct hit on residents, such as reinstating a natural gas tax would be, he said.

"We are a central location and we also have a huge daytime population as a result of the business parks," he said.

Many nearby communities, including Buffalo Grove, Libertyville and Lincolnshire, impose food and beverage taxes. Four also impose a packaged-liquor tax, according to information provided to the village board.

Besides the 1 percent of the sales tax total every community gets from the state, Vernon Hills imposes a 0.25 percent home rule sales tax. That source of revenue is projected to drop by nearly 11 percent. Together, those two sales tax sources fund nearly 60 percent of day-to-day village expenses.

However, trustees aren't keen on hiking the sales tax, partly because they want to protect the extensive inventory of brick-and-mortar stores, and to diversify its revenue sources.

Vernon Hills' amusement tax, imposed on theaters only, represents a small portion of overall revenue but also is falling short.

The AMC Theater in Hawthorn Mall and AMC Showplace 8 are 18 percent below projections of $300,000 in amusement tax revenue for the current year. The proposed budget for 2018-19 is $215,000.

Larson said the village could expand the definition of amusement taxes beyond theaters, but that would take a separate board action and no support for that surfaced.