St. Charles City Council takes step toward increasing home rule sales tax to generate more street funding

The St. Charles City Council on Monday took a step toward increasing the city’s home rule sales tax to generate more revenue for street funding.

At the City Council’s Government Operations Committee meeting, alderpersons unanimously recommended approval of the increase. The recommendation will go to the full City Council on Feb. 21 for approval.

City staff sees a 0.50% increase in the local home rule sales tax as the most effective option to address the funding gap for streets and related infrastructure. The city maintains 138 miles of streets and related infrastructure.

Finance Director Bill Hannah told alderpersons a study recently completed by the city’s public works department showed the overall condition of the city’s streets has significantly decreased in the past five years since the last time a citywide evaluation was done. He said an average mile of resurfacing costs $510,000 while an average mile of reconstruction can cost $1.6 million.

“As a street over time deteriorates, it becomes more expensive to maintain and bring it back up to satisfactory condition,” he said.

The city has about $2.9 million available on an annual basis to fund street improvements. The money comes primarily from the city’s motor fuel tax revenue from the state and some funds from video gaming tax revenue.

“That kind of puts the city on a 50-year cycle for road improvements, and as the study has shown, that’s not sufficient to keep the city streets maintained at a satisfactory level over time,” Hannah said.

He told alderpersons an increase in the local home rule sales tax from 1% to 1.50% would generate the most amount of funds to address the gap in funding needed to repave and rebuild neighborhood streets. The increase is estimated to generate about $4.4 million a year.

“In our estimate, it’s possible that this local homes sales tax is paid 40% to 60% by nonresidents,” he said. “So that was an attractive attribute of this option as we thought about this going forward.”

The city’s home rule sales tax was established in 1994 at 0.25% and increased in 1997 to 0.50%. It was increased again in 2004 to 1.00% in combination with the repeal of the food and beverage tax.

Fourth Ward Alderperson Bryan Wirball was among alderpersons who spoke in favor of the increase.

“When 52% of our roads are in poor or very poor condition, I think it’s long overdue,” he said.

Resident and former 4th Ward alderperson Steve Gaugel spoke against the increase.

“That half percent is going to put us a half percent over where our neighbors are,” he said. “It is going to make our businesses less competitive. Every St. Charles resident is going to pay this.”