Revenue Sources, assumptions and trends

Village of Lisle | Fiscal Year 2023/2024 Budget

The following is a summary of major revenue sources, trends and assumptions for fiscal year 2023/24.

Property Tax

The Village levies property taxes to provide for general corporate purposes, police protection, IMRF, FICA, Police Pension, and liability insurance. The general corporate portion of the levy funds a portion of public safety salaries. The Village does not levy for debt service but instead abates the bonds with revenue from the additional 2% hotel/motel tax.

The Village has kept the levy flat at $4,924,129 from 2017-2021. The Village Board decided to maintain the property tax levy at $4,924,129 for an additional year. In addition, the Board approved an abatement of a portion of the general corporate portion of the levy in the amount of $250,000, since the General Fund reserve balance has exceeded expectations over the past two fiscal years. Staff will continue to reevaluate the Village’s ability to keep the levy flat each year based on the Village's overall financial position.

The Police Pension levy, as recommended per the actuarial valuation is $2,062,258, which is an increase of $39,416 compared to last year’s levy amount. The increase is due to an unfavorable plan experience in the prior year due to more retirements than expected. The Village’s IMRF rate for 2023 has decreased significantly to 8.23% from 10.81% in 2022. The Village continues to use reserves allocated to IMRF/FICA to reduce the IMRF and FICA portions of the levy.

Sales Tax

The Village receives 1% from the state sales tax. Beginning in January 2021, municipalities began receiving state sales tax revenue instead of Use Tax from marketplace facilitators and eligible remote retailers as both the Illinois 6.25% Retailers Occupations Tax and locally imposed sales taxes are now collected based on where the product is delivered. The FY2023-24 budget was projected by analyzing prior year collections and factoring in the effect from new sales tax generating businesses.

Income Tax

Income tax is a state shared revenue that is distributed on a per capita basis and is based on the average income statewide. The income tax calculation is based on the Village’s current population of 24,223. The fiscal year 2022-23 estimate is $156.00 per capita and the fiscal year 2023-24 budget is based on $142.47 per capita. The per capita amounts utilized are based on amounts published by the Illinois Municipal League (IML), with a projected 5% decrease in the per capita rate in the 2023-24 budget year in anticipation of a possible recession.

Use Tax

As mentioned above, marketplace facilitators and eligible remote retailers are now required to collect both the Illinois 6.25% Retailers Occupations Tax and locally imposed sales taxes instead of the Use Tax on online purchases from sellers. Based on data collected since the new law went in effect, the change has reduced use tax revenues while increasing sales tax for the Village.

During calendar year 2020, the use tax experienced tremendous growth due to the pandemic because of significant changes in consumer purchasing behavior. IML anticipates the use tax per capita rate to stabilize following the peak in 2020. The fiscal year 2022-23 budget is based on $38.50 per capita and fiscal year 2023-24 budget is based on $38.47 per capita.

Telecommunications Tax

The Village continues to experience significant declines in the telecommunications tax due to the general trend away from landline telephones. Also, the tax is not applied to data packages or internet-based telephone communications. It is projected that the FY2023-24 budget will be approximately 16% less than the FY2020-21 actual.

Water & Sewer Service Fees

A comprehensive water and sewer rate study was completed in FY2020-21. As part of this study, the Village Board authorized the restructuring of water and sewer rates and approved a ten-year water system capital plan. The new rate structures were implemented beginning May 1, 2021 and the rates will increase under this new structure beginning in FY2022-23 through FY2024-25. Budgeted revenues, based on the recommended rates, are sufficient to cover the budgeted operating and capital expenditures in FY2023-24 and to sustain targeted fund balances.

Utility Tax

The Village collects utility taxes on natural gas and electricity. Per Village policy, utility taxes are used to fund capital projects and are accounted for in the Capital Improvement Fund. These revenues are subject to variability in seasonal temperatures from year to year and are dependent on the usage of heating and cooling systems and are not impacted by the Village’s municipal electric aggregation program.

Hotel/Motel Tax

The hotel/motel tax was greatly impacted by restrictions related to the COVID-19 pandemic which reduced both business and leisure travel in 2020. Since that time, revenues have shown a steady recovery. The budget for fiscal year 2023-24 factors in a continued recovery in the travel industry. Budgeted revenues in 2023-24 are expected to be $84,258, or 10.3% less than fiscal year 2019-20 revenues.