Sleepy Hollow finance committee backs review of 5% amusement (streaming) tax to recoup lost franchise fees

The Sleepy Hollow Finance Committee on June 11 voted to ask the village board to pursue legal review of a proposed amusement tax that would charge streaming services a percentage of monthly customer charges to capture revenue lost as residents cut traditional cable and pay for internet-based video services.

Committee members discussed examples from nearby municipalities where a 5% charge on streaming services produced meaningful revenue. The presenter identified a Compton Hills implementation that generated about $200,000 in its first year; committee members noted Compton Hills has a larger population than Sleepy Hollow and said that figure should be treated as comparative rather than predictive for Sleepy Hollow.

The committee’s discussion covered how the tax would work: the village would adopt an ordinance, notify streaming vendors and require them to collect the tax from customers within Sleepy Hollow (ZIP discussed as 60118), and provide a monthly remittance form. Staff said some communities hire outside managers to administer the tax; committee members emphasized preference to keep administration municipal unless workload compelled contracting.

Members also reviewed how the village currently receives franchise and utility-related fees. Staff reported franchise revenues tied to TV services have declined (examples cited by staff showed franchise revenues falling from highs around $59,000 in earlier years to roughly $35,000 in the most recent fiscal year), and local-use-tax receipts varied year to year. The amusement/streaming tax was presented specifically as a potential offset to those declines.

On the motion before the committee, members voted to recommend that the board authorize legal review and follow-up analysis. The committee directed staff to forward the draft ordinance to the village attorney, Mark Schuster, for an opinion on whether the village — as a non-home-rule municipality — may move forward with an amusement tax for streaming services and on the draft ordinance’s form and administration requirements.

Next steps: the committee’s action was a recommendation to the board, not an adoption of a tax. The board must decide whether to authorize legal review and then whether to place an ordinance or a referendum before voters if required. If the board directs further work, staff indicated additional analysis would include local household counts, projected revenue modeling, and administrative cost estimates.