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TO: Mayor Richard C. Irvin
FROM: Stacey Hamling, Interim Chief Financial Officer
Alex Alexandrou, Chief Management Officer
DATE: December 1, 2017
SUBJECT:
An ordinance amending Chapter 44 of the City of Aurora Code of Ordinances entitled "Taxation" (Municipal Electricity Tax).
PURPOSE:
Attached for your consideration is an ordinance proposing an increase of the city's Municipal Electricity Tax.
BACKGROUND:
The City of Aurora implemented a municipal electricity tax in 1997 (O97-107). The tax is imposed on a per usage basis, illustrated in the chart below. The rates have not changed in the ten (10) year period since the initial implementation.
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For the first 2,000 kilowatt-hours used or consumed in a month; |
0.331 cents per kilowatt-hour; |
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For the next 48,000 kilowatt-hours used or consumed in a month; |
0.217 cents per kilowatt-hour; |
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For the next 50,000 kilowatt-hours used or consumed in a month; |
0.196 cents per kilowatt-hour; |
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For the next 400,000 kilowatt-hours used or consumed in a month; |
0.190 cents per kilowatt-hour; |
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For the next 500,000 kilowatt-hours used or consumed in a month; |
0.185 cents per kilowatt-hour; |
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For the next 2,000,000 kilowatt-hours used or consumed in a month; |
0.174 cents per kilowatt-hour; |
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For the next 2,000,000 kilowatt-hours used or consumed in a month; |
0.171 cents per kilowatt-hour; |
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For the next 5,000,000 kilowatt-hours used or consumed in a month; |
0.168 cents per kilowatt-hour; |
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For the next 10,000,000 kilowatt-hours used or consumed in a month; |
0.166 cents per kilowatt-hour; |
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For all electricity used or consumed in excess of 20,000,000 kilowatt-hours; |
0.163 cents per kilowatt-hour; |
DISCUSSION:
The preparation of the 2018 budget was accompanied by new challenges, driven largely by the loss of approximately $3 million dollars due to state mandates. The Local Government Distributive Fund (LGDF) and the Personal Property Replacement Tax (PPRT) saw significant reductions in addition to a new two (2) percent administrative fee on sales tax collection.
To combat the deficit without increasing the property tax burden, staff began to research neighboring and comparable municipalities. Of our comparable communities, Aurora’s “base” rate (for the first 2,000 kilowatt-hours used or consumed in a month), was the lowest.
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Aurora |
0.331 |
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Joliet |
0.348 |
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Waukegan |
0.578 |
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Elgin |
0.61 |
The 2017 budget for the Electricity Use Tax was $3.5 million and as of today is approximately $2.5 million. With the implementation of smart-meters citywide, and increased education on efficiency, resident’s usage is anticipated to continue to decrease. As residential usage becomes more efficient, the proposed increase will allow the city to stabilize this revenue stream.
The new proposed rates are listed below.
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For the first 2,000 kilowatt-hours used or consumed in a month; |
0.61 cents per kilowatt-hour; |
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For the next 48,000 kilowatt-hours used or consumed in a month; |
0.4 cents per kilowatt-hour; |
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For the next 50,000 kilowatt-hours used or consumed in a month; |
0.36 cents per kilowatt-hour; |
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For the next 400,000 kilowatt-hours used or consumed in a month; |
0.35 cents per kilowatt-hour; |
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For the next 500,000 kilowatt-hours used or consumed in a month; |
0.34 cents per kilowatt-hour; |
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For the next 2,000,000 kilowatt-hours used or consumed in a month; |
0.32 cents per kilowatt-hour; |
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For the next 2,000,000 kilowatt-hours used or consumed in a month; |
0.315 cents per kilowatt-hour; |
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For the next 5,000,000 kilowatt-hours used or consumed in a month; |
0.31 cents per kilowatt-hour; |
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For the next 10,000,000 kilowatt-hours used or consumed in a month; |
0.305 cents per kilowatt-hour; |
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For all electricity used or consumed in excess of 20,000,000 kilowatt-hours in a month; |
0.3 cents per kilowatt-hour; |
The proposed rate change will not impact Resolution R98-51 (attached), which established a Municipal Utility Tax Rebate (Electric and Natural Gas Use) for senior citizens and persons with a disability. The rebate process will remain the same.
IMPACT STATEMENT:
The proposed increase, if accepted is anticipated to account for the loss of revenue created by the State.
RECOMMENDATIONS:
It is respectfully requested that the Finance Committee forward this to the Tuesday, December 5, 2017 Committee of the Whole meeting.
cc: Alderman O’Connor, Chairman
Alderman Mesiacos
Alderman Bugg
Alderman Mervine, Alternate
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
title
An Ordinance Amending Chapter 44, Article III, Section 44-32, of the Code of Ordinances of the City of Aurora Entitled “Taxation” (Municipal Electricity Tax).
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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, it is necessary and desirable for the City of Aurora to amend its ordinances regarding taxation by increasing the municipal electricity tax.
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows:
SECTION 1: That, effective January 1, 2018, Chapter 44, Article III, Section 44-32(e), of the Code of Ordinances of the City of Aurora, Illinois, is amended by revising the rate chart contained therein to reflect the following rates:
Kilowatt-Hours Used
or Consumed in a Month Cost Per Kilowatt-Hour
First 2,000 0.61 cents
Next 48,000 0.40 cents
Next 50,000 0.36 cents
Next 400,000 0.35 cents
Next 500,000 0.34 cents
Next 2,000,000 0.32 cents
Next 2,000,000 0.315 cents
Next 5,000,000 0.31 cents
Next 10,000,000 0.305 cents
All in excess of 20,000,000 0.30 cents
SECTION 2: That this Ordinance shall be in full force and effect from and after its passage, approval and publication in pamphlet form as provided by law.
PASSED by the City Council of the City of Aurora, Illinois, on .
AYES ____ NAYS ____ ABSENT ____ NOT VOTING ____
APPROVED AND SIGNED by the Mayor of the City of Aurora, Illinois, on _______________________.
______________________________
Mayor
ATTEST:
_______________________________
City Clerk