A Tale of Two Villages
Hopes that Village officials would find funds to fix crumbling Hinsdale roads and extensive infrastructure problems hit another speed bump Tuesday night, when voters rejected a second pass at a referendum to raise the sales tax. Hinsdale officials were seeking to impose a 1% non-home rule sales tax increase to create a perpetual revenue stream--optimally $1.5 million annually--earmarked for public infrastructure improvements. The failed referendum reflected a larger trend in DuPage County, where voters resoundingly turned down six out of six ballot propositions which asked for increased funding for parks, schools, libraries, and roads. In neighboring Western Springs, however, officials made the decision to tackle Village infrastructure funding head on, by putting a referendum on the Nov. 4 ballot for a $6.5-million Roadway Bond issue. At the Aug. 25, 2008 meeting at which Trustees voted to place the referendum on the ballot, Western Springs President John Lynch acknowledged, "The timing may never be right to ask residents to pay more taxes," but Trustee Janet Dahl stressed that poor road conditions compelled the Board to action. "There was severe deterioration of our roads this winter, highlighting the need for a more aggressive program of repair and replacement," Dahl stated Wednesday. "Some of the streets literally turned to pebbles." The measure passed, albeit by a narrow margin: 53% to 47%.
It was the best of times, it was the worst of times
In Western Springs, as in Hinsdale, officials contend with property tax caps imposed by an Illinois state statute, The Property Tax Extension Limitation Law (PTELL), that limits local taxing entities to an increase of 5%, or the Consumer Price Index (CPI)--whichever is less. Municipalities must seek alternate funding. Village of Hinsdale Director of Finance Doug Cooper said the Hinsdale Finance Commission considered various sources for road and infrastructure improvements, but decided that a 1% sales tax increase would be the least onerous for Hinsdale residents because non-resident shoppers would pay a significant portion of the cost. When asked why Western Springs Trustees chose a bond issue over an increase in the sales tax, Western Springs Trustee Janet Dahl responded: "Our Village does not have sufficient revenue from sales tax to make it a viable source for the expense of roadways. We wish to keep our merchants appealing and hope our downtown will grow. Added sales taxes would not help this goal."
Clearly defined spending objectives are themselves a requirement of General Obligation bonds, according to Cooper, who explained the different funding sources sought by Hinsdale and Western Springs. "General Obligation bond proceeds can only be used for specifically stated purposes--in the case of Western Springs, road improvements--and, once paid off, the obligation goes away." Taxing entities can request additional GO bonds in another referendum, if needed, said Cooper. A sales tax increase, however, is a one-time request and results in funds that will continue into perpetuity. The revenue from a sales tax would fluctuate with the economy, Cooper added. Village-produced literature states that benefits from the sales tax increase would not impact the Roads Program until 2010.
According to the Fall 2008 edition of Village VIEWS, "State law requires that expenditure of the revenue from an increase in the local sales tax rate may only be used for infrastructure or property tax relief. The Village has decided that the funds would solely be used to address infrastructure needs." Even though revenue from a sales tax increase must be spent on public infrastructure, the term cuts a wide swath and does not limit the Village exclusively to road repairs. As defined by the Illinois Compiled Statues, "public infrastructure is defined as municipal roads and streets, access roads, bridges, and sidewalks; waste disposal systems; and water and sewer line extensions; water distribution and purification facilities, storm water drainage and retention facilities, and sewage treatment facilities."
Both communities made efforts to educate residents in preparation for the referenda. To inform residents about the need for additional road repair funding, Western Springs Village staff dedicated a special issue of the Village newsletter Tower Topics to the subject. The publication gave background information on the allocation and sources of Village revenues; the infrastructure master plan; proposed cost and schedule of improvements; and the estimated tax increase per household: e.g., $132 for a $10,000 tax bill. See Tower Topics> Trustee Dahl proudly characterized the mailing, developed by Western Springs in-house Communications Coordinator Peg Schuenke and her team, as "superlative". Western Springs resident and merchant Kate McMillan, who owns stores in both communities (French Toast in Hinsdale and Clever Girl in Western Springs) credited effective Village communications with the success of the Western Springs referendum. "The issue was put to the public in a reasonable way--clearly indicating the cost per homeowner--so that it made sense," McMillan said. "What sold me was seeing the bottom line of what I would have to pay. Even if it takes ten years--it's not that hard."
"Tell wind and fire where to stop," returned Madame, "But don't tell me."
In Hinsdale, officials devoted significant attention and resources--$16,400--to materials and mailings about the need for the sales tax increase. As the election drew near, the stated purpose of the funds varied from one publication to the next. The Summer 2008 Hinsdale Village VIEWS outlined the infrastructure plan and specifically stated, "These funds would be applied solely to the Road Program." By Fall, in the Special Edition Village VIEWS dedicated to the referendum, the scope of sales tax benefits broadened to include drainage problems: "With the additional revenue generated from the 1% sales tax increase, the Village can rectify storm water drainage issues which are responsible for the flooding of streets and damage to residential property. Additionally, repairing streets will increase public safety and help maintain property values."
In a postcard sent just before the election, the possibilities had expanded even further. "The Finance Commission," the card states, "has recommended that the sales tax be the alternative to help finance improvements to Village roads, drainage systems, storm water capacity and other pressing needs," and includes the "replacement of the old water mains and fire hydrants." Finally, statements in the Doings by Village Manager Dave Cook and President Woerner may have given some residents pause. In an Oct. 28 summary of an election interview, Doings reporter Amy Deis wrote: "Cook and Woerner said if the referendum passes, officials will have more flexibility to use money that was budgeted for streets on such other projects as signs and landscaping in the downtown," raising concerns that, given a new revenue stream for road improvements, officials might not curtail spending, but simply redirect existing infrastructure allocations toward other pet projects.
Store owner Kate McMillan suggested that Hinsdale officials' inability to convince voters that the money would solely be used for the purpose intended contributed to the failed referendum in Hinsdale. "It isn't the fact that it was a sales tax, or any other tax proposition; rather, it's mistrust for officials among residents--who didn't know how the money might be used," she said. Eleventh-hour emails from proponents of the measure and door hangers from an ad hoc Political Action Committee called "Citizens for a Better Hinsdale" were widely circulated, but failed to reassure voters. Despite the last-ditch efforts, the referendum failed by a vote of 57% to 43%.
Sadly, sadly, the sun rose
After the vote, Hinsdale President Mike Woerner bemoaned the difficult economic climate and said he was not surprised the measure was unsuccessful. "It's human nature, that when these people come out to vote and see a question about raising taxes, they're going to vote no," Woerner was quoted in the Nov. 6 Hinsdalean. "It's almost impossible to raise taxes during a bad economy. Knowing all that in my head, I knew it was the wrong place and time." Resident Jerry Hughes, an outspoken critic of the referendum, disagreed. "Any attempt to dismiss the rejection by the citizens as an inevitable and anticipated consequence of the economy is belied by the significant time and money the village put into the so-called education campaign," he said. "I think [the measure] failed because it was a mediocre plan with meaningful, but not fatal, flaws presented by an administration that is widely distrusted by the residents."
It was the epoch of belief, it was the epoch of incredulity
Compounding the problem, Hinsdale officials may be up against a case of referendum fatigue, not only from failed measures, such as the first two sales tax referenda and the second electric utility referendum, but also from expensive propositions looming on the horizon: the $3.5 million Veeck Park Wet Weather Facility back-door referendum; the 
increase in utility tax rates; the possible resurrection of the $80 million electric referendum; the Woodlands Drainage and Pavement Improvements plan, which has an estimated $40,000-per-household price tag; not to mention the combined performing arts center and parking garage--the proposed flagship for the Northtown/Central Business district. A request by the Board to fund basic services may have been obscured by the sheer number of big plans.
Hinsdale resident Deb Braselton said a lack of trust and fear of the current Board's fiscal excess made her vote against the sales tax. "I don't trust certain members of the Board to give me the complete truth," she stated. "Nor was I reassured that, if this passed, they wouldn't be back for more." Doug Cooper expects the Finance Commission and Trustees will be revisiting this issue and looking for other funding solutions in the near future. Said Jerry Hughes, "This Village electorate is unlikely to approve anything of consequence, until we get new leaders. Nor should it."