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East Dundee board reviews 2025 budget, considers 2¢ gas tax and 5% water-rate increase as funding option
Summary
During deliberations on the proposed 2025 budget trustees reviewed a recommended 5% property tax levy increase to help bridge a police pension gap, discussed capturing grocery sales tax, a municipal gas tax (1¢–2¢), a 0.25% BDD increase for the downtown parking garage and three water-rate options; staff will refine revenue projections and return Dec. 2.
The East Dundee Village Board on Nov. 18 heard a line‑by‑line review of proposed 2025 revenue and capital assumptions and debated several new local revenue sources to fund police pension obligations and capital projects.
Finance staff told the board the draft levy recommendation is a 5% increase, raising the village levy from $761,503 to $799,579. That increase is intended in significant part to help cover the village’s police‑pension contribution; staff said the proposed 2025 budget budgets a police‑pension contribution of about $1.3 million and that the village will supplement the difference from the general fund.
The board discussed several possible new or expanded local taxes: • Grocery sales tax capture (staff said implementation would take effect Jan. 2026 and would reallocate revenue currently collected by the state). • A municipal gas tax (staff estimated ~ $250,000 per penny; board discussed 1¢ or 2¢ per gallon, with an April 1 start date possible). • Increasing the downtown Dundee Crossings BDD from 0.75% to 1% to help pay parking garage bonds (limited to the downtown BDD area).
Board members also reviewed three water/sewer rate options presented by staff: (1) maintain the previously adopted schedule with a 3% increase; (2) raise water rates 10% and sewer 3% (funds full capital plan over eight years); or (3) adopt a tiered water structure (10%/15%/20%) plus a $2 meter charge. Trustees worried about the impact of large annual jumps on residents, the distributional effects of tiering on seniors and the business community, and said they wanted to see combined revenue modeling that includes any gas‑tax receipts.
During the discussion trustees signaled a tentative preference to implement a 2¢ municipal gas tax (with proceeds split for capital needs) and to move forward with a more modest 5% water‑rate increase for next year, with the understanding the board would reassess after one year of gas‑tax revenue. The board instructed staff to run updated revenue projections and to return with ordinance language and a staff recommendation at the next meetings; the budget ordinance consideration is scheduled for Dec. 2.
Next steps: staff will refine revenue and rate projections, produce a clear 'dollar split' diagram of how the tax changes affect residents' bills, and return with recommended ordinance language and final budget figures for board action in December.
