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Cary considers new taxes to fill $700,000 budget deficit

CARY – The Cary Village Board is looking to new taxes to try to fill a $700,000 budget deficit for fiscal 2019.

At a recent Committee of the Whole meeting, the board heard ways to increase revenue through new taxes; license and permit fee increases; or by capturing new growth in the village’s property tax levy.

Finance Director Michael DuCharme and Village Administrator Jake Rife will discuss options again in October and present a six-month budget overview of how fiscal 2018 is going.

“The overall message here is that we are going to have to make some tough decisions,” Rife told the board at the Aug. 15 meeting. “I want to continue to get the information in front of you so you can make the best tough decision that we can. I understand it’s not what you want to hear, but it’s the facts and reality.”

Rife said the Village Board has been trying to use long-range budget planning and started talking to the board about the deficit in October. 

The deficit is because of several factors, Rife said. The long-awaited state budget reduced the amount of income tax that villages get monthly through the local government distribution fund by 10 percent, furthering the $550,000 deficit officials already were fighting.

Right now, income tax generates $1.85 million for the village, DuCharme said.

Village shares of the police pension funds also are expected to increase by $100,000 next year, along with village employee wages and insurance costs continuing to increase, Rife said.

“When you get up to a sum of approximately $700,000, it’s hard to generate new revenue sources to make up that hole, but it is equally difficult to reduce that amount from an operating budget,” DuCharme said.

Cary’s general fund budget is more than $8 million, according to village documents. Salaries and benefits make up 75 percent, and another 10 percent is from contractual agreements, DuCharme said.

Since 2008, village staff has been reduced from 85 full-time positions to 54, and the village still is trying to make cuts, according to village documents.

DuCharme said Cary has not seen growth in its sales tax either. In 2000, Cary received $1 million in sales tax, and the village currently gets $1.3 million.

Trustee Ellen McAlpine said at the meeting that the village needs to prioritize economic development, as long as it is a “proper, sustainable income-producing development,” such as adding a car dealership on Route 31.

Trustee Jennifer Weinhammer said Thursday that she is not in favor of increasing taxes for residents, but she feels the village needs to review each line item of its expenditures to see what can be eliminated. 

“I don’t believe it’s fair to continue to pass four or five different types of taxes onto the residents,” she said.

Because Cary is not a home rule municipality, it is subject to property tax caps, and there are few new revenue sources available to implement, DuCharme said.

Options to increase revenue include creating a gas utility tax, creating an eating establishment tax, increasing the cable franchise fee, increasing license and permit fees for the village, or increasing the village’s property tax levy by considering new growth, according to village documents.

“There isn’t a lot of sugarcoating here – these are essentially taxes,” Rife said. “It is kind of a last resort to look at new taxes, but that is where we are sitting. The village made some tough decisions already over the last two years.”

The village’s fiscal year runs from May 1 to April 30. The village will begin its budget process this winter.

“We will have to continue to look at how we provide services here,” Rife said. “We don’t want to have to cut any of our services. The village will continue to work and create partnerships for sharing of services to help control costs. We have to challenge the status quo of how we provide services.”


New taxes on the table in Cary:

• Natural gas utility tax: About $200,000 in new revenue

• Eating establishment tax: About $150,000 in new revenue

• Increase cable franchise fee from 4 percent to 5 percent: About $60,000 in new revenue

• Increase license and permit fees: Revenue varies based on increase

• Increase property taxes (new growth): Revenue varies  

Source: Cary Village Board documents