200-Year-Old Illinois City Ponders First Utility Tax

For the first time since its establishment in 1827 – about 190 years ago – the city of Danville, in eastern Illinois, is considering imposing a utility tax.

It may be a good way to raise revenue, but local regulators have avoided levying extra energy charges, in order to keep large business and industrial customers happy – and thus, sustain jobs in the area.

However, now, rising, state-mandated pension costs have brought the sensitive subject up for discussion again, according to a November 3 report in the Danville Commercial-News.

Indeed, Mayor Scott Eisenhauer told the local news outlet that he thinks a utility tax is the best new revenue option to cover a $1.5 million fire and police pension cost increase from a year ago. He sees the tax as a more attractive alternative to increasing the public safety pension fee, property tax, or local sales tax; as some Danville aldermen have suggested.

In all, there have been about 14 tax levy options – as many as the number of Aldermen currently serving on the City Council – on the table for discussion.

“We tried to listen to all of you,” Eisenhauer told the aldermen at a City Council meeting on November 4, admitting that some of those suggestions were included in the tax levy being proposed and some weren’t.

The new utility tax, if approved by the Council, would go into effect next April, and start filling Danville’s coffers in May.

The city has 12,528 residential, 1,849 commercial, and nine industrial electric service customers. The annual kilowatt-hour (kWh) usage is about 112 million for residential customers, 180 million for commercial customers, and 160 million for industrial customers.

The city is served by Ameren Illinois, as well as by competitive retail energy providers.

Some sample electricity bills show that he utility tax could cost a residential customer from about $3.55 to $7.17 more a month. A sample commercial bill of a Danville restaurant would see its monthly electricity bill increase $106.10 a month.

For natural gas, there are 10,943 residential, 957 commercial and four industrial customers in the city, in addition to 104 gas transport. Total annual therms for all are about 27 million. The utility tax would increase some sample natural gas bills by about 82 cents to $1.25.

Eisenhauer said they are working with Vermilion Advantage – a regional economic advantage advocate – to get current bills from industries.

Vermilion Advantage President Vicki Haugen said this type of tax is never viewed as a positive by utility-intensive industries in the community, according to the report in the Danville Commercial-News. But she and industry officials also know the city is facing mandatory costs imposed upon them by the state for which the city has few options.

“I think we all know the ramifications to our community if we lose or see further reduction to the industrial base and the jobs/benefits they provide. It is a double-edge sword any way you look at it. However, until our state government decides they are going to do their job and make the difficult changes that need to be made, local communities are going to continue to be faced with these difficult — some might say — impossible funding mandates with which to comply. It’s just plain sad,” she said through an emailed statement.

Ward 6 Alderman Steve Nichols is concerned about three-fourths of the utility tax being paid by local businesses, the local news outlet said. And for his part, Ward 1 Alderman Rickey Williams, Jr., said he can’t see the city taking another $1.5 million from the public in addition to the sales tax increase already approved for demolitions and neighborhood revitalization.

There will be a tax levy and budget study session at next week’s City Council Public Works Committee meeting, on November 15.

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