Cities defend 'revenue increases' as necessary; those affected feel officials are acting without public's consent
CHAMPAIGN — The day the city released a proposed budget last week was the first day that drivers began paying 4 cents more per gallon at the gas pump toward road repairs.
The timing was coincidental but appropriate.
As revenues have shrunk while costs continue to expand, some elected officials have defended the gas tax and other charges like it as essential to maintain a balanced financial plan without cutting too deeply into services.
In both Champaign and Urbana, new fees and tax increases have been years in the making. Administrators refer to them as "revenue increases," and they are worth millions of dollars to city budgets. On the other hand, each has encountered some degree of public resistance along the way.
"Instead of cutting back like homeowners have to do and families have to do, they just go ahead and keep raising fees," said Brian Sullivan, a Champaign property owner and landlord.
But officials have cut back. City budgets have shrunk by millions of dollars: In Champaign, officials have rebuilt fewer roads, cut overtime for firefighters and eliminated dozens of city jobs. Champaign officials argue that the balances they have made will put the city in a better position when the economy begins to rebound.
"The new fee and fee increases adopted in prior years somewhat mitigated the effect of service reductions from budget cuts," said Champaign Finance Director Richard Schnuer. "However, the revenue increases were small compared to the budget cuts. Very small."
As a landlord, Sullivan was particularly interested in a new multifamily recycling fee in 2010, which created a program that provides at-home service to residents living in complexes with four or more units.
The $2.60-per-unit monthly fee will generate $545,000 this year. It has not had a visible effect on Sullivan's rents, he said, but it's the compound effect that hurts — especially for landlords who own a lot of property.
"The problem is, we couldn't raise (rents) anymore because we have so many other fees," Sullivan said. "And when we continue to raise them, people move out."
Capital projects have been a concern, too. The city of Champaign has borrowed $2 million from the account that pays for road and sewer projects and moved it to the general fund, which pays for the day-to-day operating expenses of the city.
That means some road projects and maintenance were sacrificed to maintain basic city services that already existed. The problem there, Schnuer said, is that roads that go unfixed break down to a point where asphalt patching will not solve the problem, and a much more expensive reconstruction becomes necessary.
"Unfortunately, it's a pretty vicious downward cycle," Schnuer said.
That's where the 4-cent per gallon gas tax comes in. It will create $1.5 million annually in new money, and one of the first projects on the list is an upgraded version of Windsor Road where it passes over Interstate 57, complete with bicycle lanes and sidewalks.
The city of Urbana preceded Champaign in its approval of a gas tax in 2010. It was initially implemented at 2 cents per gallon, with graduated increases until 2013. Urbana's gas tax is scheduled to rise to 2.8 cents per gallon this July, but Mayor Laurel Prussing said she will propose a budget Monday with a 4-cent per gallon gas tax, effective this July.
The Urbana City Council on Monday is also scheduled for a final vote on the storm-water fee.
Through all of Urbana's revenue increases during the past few years, Prussing said, she has not heard too much opposition.
"If people understand what the money is going for and it's something that they want, they'll accept it," Prussing said.
In 2011, the city of Urbana approved a 1 percent tax on package liquor after the Champaign City Council denied a similar 4 percent liquor tax.
That follows from Prussing's philosophy to "keep it below the pain threshold," she said. And it has been balanced by Urbana's measures to keep costs down, she added. City officials have kept staff raises to a minimum, only paying out raises that have been dictated by legally binding arbitration with city unions.
Back in Champaign, Salem Baptist Church is planning for a new storm-water drainage fee it knows it will have to pay next year. The church itself is pretty big, the parking lot is even bigger and the Rev. Claude Shelby knows that he'll be charged for every square foot of shingle and pavement.
"This is just another thing that will add on to our expenditures when we do so much for the community," Shelby said.
He is not sure yet how much he will have to pay when the first bill comes in 2013, but it is likely to be in the hundreds of dollars annually. The city expects to collect $3.2 million each year, all of which will go toward chipping away at an $80 million list of unfunded storm-water drainage projects.
The first in line to benefit from the fee are residents along West Washington Street who say they have been plagued with flooded yards and basements for years.
Without the city council-approved storm-water fee, "we could not have done that without significantly cutting basic services," Schnuer said.
But Sullivan said he is frustrated. He has sent letters to city officials and lobbied against the new charges. Some of the charges are very specific, he said, and target small groups that do not have enough clout to fight them.
"It doesn't seem like what we say or do is going to make a difference," Sullivan said. "They just go ahead and do it."
Recently instituted taxes/fees and revenue in Champaign-Urbana
Year/CityTypeAnnual revenue Champaign 2013Storm-water fee $3.2 million20124-cent gas tax $1.5 million2012Property tax rate increase $400,000*2010Multifamily recycling fee $545,0002009Vehicle impoundment fee $214,000 Urbana 2012Property tax rate increase $145,000*2011Hotel-motel tax increase $130,0002011Package liquor tax $92,0002010Gas tax $418,000 this year
On the horizon
In Champaign, the city council has given preliminary support to a fee on plastic bags given to customers at checkout. Final approval is pending, but officials estimate the fee could create $200,000 annually in new revenue.
In Urbana, the city council has supported a storm-water fee that could create $1.7 million annually in new revenue. The fee could be finalized soon, and billing would start in 2013. Mayor Laurel Prussing says she'll propose a budget on Monday that includes a 4-cent per gallon gas tax, effective in July. That figure is above the scheduled 2.8-cent rate for that tax.
*Revenue created had the tax rate otherwise remained flat. The city council approved a flat property tax levy, but the rate rose because property values dropped.