cover
TO: Mayor Thomas J. Weisner
FROM: Carie Anne Ergo, Chief Management Officer
DATE: November 20, 2015
SUBJECT:
An Ordinance Amending Chapter 44 of the City of Aurora Code of Ordinances to Add a New Article II Entitled “Municipal Motor Fuel Tax”.
PURPOSE:
Attached for your consideration is an ordinance proposing the implementation of a Municipal Motor Fuel Tax in the City of Aurora.
BACKGROUND:
Over the past decade, Aurora's gaming tax revenues have declined by more than 50% as the State of Illinois underwent a massive gaming expansion, adding brick and mortar casinos, and approving the use of video gaming terminals statewide. As a result Aurora's gaming tax revenues have declined from nearly $16 annually in 2007 to approximately $7 million next year. Compounding the impact of this reduction is the fact that the State of Illinois has refused to disperse gaming tax revenues to cities since July 1. By the end of the year, Aurora anticipates this loss to exceed $3.5 million.
Historically, city gaming tax revenues were used to fund economic development, community programs, neighborhood street resurfacing and debt abatement. As gaming tax revenues continued to decline, the city began shifting expenditures traditionally funded by gaming taxes to other revenue sources. The residential street resurfacing program, which is funded at
$5-6 million annually, was shifted from the Gaming Tax Fund to Capital Improvement A Fund.
The city responsibly spent down accumulated fund balances in Capital Improvement A during the recessionary period to absorb this additional expenditure, however, this is not a sustainable long-term option. In order to continue to improve neighborhood streets while at the same time maintaining other elements of the city's aging capital and technology infrastructure, it is now necessary to generate additional revenue.
DISCUSSION:
City staff considered a number of options to provide a dedicated revenue source for funding the maintenance and improvement of residential streets, including increasing property taxes, increasing general sales taxes, implementing vehicle stickers and implementing a Municipal Motor Fuel Tax (MMFT).
The ability of a governing body to approve a Municipal Motor Fuel Tax is reserved for Home Rule municipalities, therefore, most cities with a population less than 25,000 do not have this revenue option. Staff surveyed neighboring cities and comparable cities, reviewed publicly available information on cities throughout Illinois, and reviewed information received from DuPage Mayors and Managers. The research revealed the following:
• MMFT rates in the area range between $0.01 and $0.07 per gallon.
• The most common MMFT rate among surveyed cities was $0.04.
• 4 out of the 5 home rule municipalities that border Aurora currently have a MMFT, including: Batavia, Naperville, Plainfield and Warrenville.
• 3 of the 4 cities listed above have a MMFT rate of $.04.
The City of Aurora is home to three tollway exits, two major regional shopping destinations, the Paramount Theatre, RiverEdge Park, Hollywood Casino, Waubonsee Community College, Aurora University, four museums and countless other restaurants and destinations. These attractions and amenities not only enhance quality of life for our residents, but, also bring a substantial number of visitors to our community. Of the approximately 44 gas stations located in Aurora, the vast majority are located within one mile of a major arterial or tollway exit. This proximity maximizes the city ability to capture significant MMFT revenue from visitors and non-residential commuters.
To that end, the Administration has proposed the implementation of a $0.04 per gallon Municipal Motor Fuel Tax (MMFT). Utilizing the proposed $0.04 per gallon rate, city staff anticipates the MMFT could generate an estimated $3.2 million per year. The dollars generated from this tax would be restricted to a new Municipal Motor Fuel Tax Fund for the maintenance and improvement of local roads.
IMPACT STATEMENT:
The City of Aurora spends between $5-6 million annually on residential street resurfacing. Periodically, the city has its streets evaluated by an independent consultant to determine the sufficiency of its maintenance program. Over the last 5 years, the pavement condition index of city roadways has remained relatively stable. A reduction in funding would likely result in the deterioration of area roadways and increased future maintenance costs.
The proposed MMFT would allow the city to generate the additional revenue needed to fund local road improvements at the current level without placing the burden squarely on its residents. The 2016 Budget projects spending $5.7 million on the neighborhood street resurfacing program - $3.2 million is to be funded through the implementation of a Municipal Motor Fuel Tax. If the MMFT is not approved, the city would only expend $2.5 million on residential street resurfacing in 2016.
RECOMMENDATIONS:
It is recommended the Finance Committee forward this item to Committee of the Whole for the Tuesday, December 1, 2015 meeting.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
title
An Ordinance Amending Chapter 44 of the City of Aurora Code of Ordinances to Add a New Article II Entitled “Municipal Motor Fuel Tax”.
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, pursuant to the City’s home rule authority, the City desires to impose a motor fuel tax of $0.04 cents per gallon on all retail sales of motor fuel, except for the specific exemptions stated herein; and
WHEREAS, the Council finds that the herein City Code amendment imposing a motor fuel tax furthers the public health, welfare and safety, and is in the best interests of the City, its residents and the public.
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows: Section One: That a new Article II entitled “Municipal Motor Fuel Tax” be added to Chapter 44 as follows:
ARTICLE II. MUNICIPAL MOTOR FUEL TAX
Sec. 44-11. Definitions.
For purposes of this Article, the following words and phrases shall have the meaning ascribed to them in this section:
Motor Fuel means all volatile liquids compounded or used for fueling motor vehicles, including gasoline, gasohol, compressed natural gas and diesel fuel.
Motor Fuel Retailer means any person, firm or corporation engaged in the business of selling motor fuel at retail, and not for resale.
Sec. 44-12. Tax imposed.
There is hereby imposed and levied a tax within the City of Aurora upon the retail purchase of motor fuel, at the rate of four cents ($0.04) per gallon or fraction thereof. This tax shall be in addition to any and all other taxes. The ultimate incidence and liability for payment of such tax shall be upon the retail purchaser of motor fuel; the collection of the tax is the responsibility of the motor fuel retailer. Nothing herein shall be construed to impose a tax upon the occupation of selling motor fuel. It shall be a violation of this Article for any motor fuel retailer to refuse or fail to add this tax to the retail price of motor fuel or to absorb the tax out of the motor fuel retailer’s own funds.
Sec. 44-13. Allocation of funds collected.
All monies collected pursuant to this article shall be allocated to the Municipal Motor Fuel Tax Fund for the maintenance and improvement of streets and roadways.
Sec. 44-14. Collection of tax.
Each motor fuel retailer in the City shall have the duty to collect the motor fuel tax from each purchaser and to pay said tax over to the City of Aurora, along with an accounting therefor, on return forms provided by the City. All return forms and tax payments shall be filed with the Chief Financial Officer or his designee in the Finance Department on the same filing dates as are established for filing with the Illinois Department of Revenue of the Sales and Use Tax Return Form ST-1, and shall be accompanied by a copy of the executed, filed Form ST-1 for the applicable period.
Sec. 44-15. Registration and maintenance of records.
Each motor fuel retailer shall register with the City on forms provided by the Chief Financial Officer. Each motor fuel retailer shall have the duty to maintain complete and accurate books, records and accounts showing the gross receipts for the sale of motor fuel and the taxes collected from the purchaser thereof for a period of at least twenty-four (24) months, which shall be available to the Chief Financial Officer or his designee for examination and for audit by the City upon reasonable notice during customary business hours.
Sec. 44-16. Sales presumed taxable; burden of proof; exemptions.
It shall be presumed that all sales of motor fuel in the City are subject to tax under this Article until the contrary is established. The burden of proving that a sale is not taxable hereunder shall be upon the motor fuel retailer, purchaser or user so claiming.
The tax imposed shall not apply to the following sales:
Sale or use by the federal government or any state or local governmental body;
Sale to the extent the tax imposed by this Article would violate the Illinois or State Constitution.
Sec. 44-17. Late payment penalty; commission if timely.
A commission of two and one-tenth percent (2.1%) may be deducted from the amount of tax due if payment is made on a timely basis. If any tax imposed by this Article is not paid over to the City when due, a late payment penalty equal to seven and one-half percent (7.5%) of the unpaid tax, plus one and one-quarter percent (1.25%) interest, shall be added for each month or any portion thereof that such tax remains unpaid. The total of such late payment penalty and interest shall be paid along with the tax imposed hereby. The City may choose to bring legal or other collection action to collect any unpaid tax or penalty.
Sec. 44-18. Penalty/fines.
In addition to any other penalty, any person violating any provision of this Article, upon conviction thereof, shall be fined not less than one hundred dollars ($100.00) nor more than one thousand dollars ($1,000.00) for each such offense. Each failure to collect the tax imposed hereby and each failure to pay such tax over to the City shall constitute a separate violation hereof.
Sec. 44-19. Administrative hearing.
The City may choose to use the administrative hearing process in order to enforce any provision of this article, and likewise, any person wishing to contest a penalty/fine arising under this article may request an administrative hearing. Such administrative hearings shall be conducted in accordance with 65 ILCS 5/1-2.1.
Section Two: That this ordinance shall be in full force and effect, and shall be controlling, upon its passage and approval, with a first collection date of February 1, 2016.
Section Three: That all ordinances or parts of ordinances thereof in conflict herewith are hereby repealed to the extent of any such conflict.
Section Four: That any Section or provision of this Ordinance that is construed to be invalid or void shall not affect the remaining Sections or provisions, which shall remain in full force and effect thereafter.