GENEVA – As the cost of cellphone contracts goes down, the amount collected in excise taxes by Geneva will go down, 2nd Ward Alderman Donald Cummings said at a recent City Council meeting.
“We jumped to a different plan … and our bill went from $297 for five phones with data and texting … to $140 for all data, all the talking and texting,” he said. “… I can’t be the only person doing this. If our cellphone bills are … all going down, the [telecommunications excise] tax is based on that. I think this is something we should watch.”
The monthly staff report on the June excise tax report put the city’s revenue from the tax at $87,600, more than 34 percent less than June 2012, which was $133,000.
Cummings said his worry when he saw the telecommunications excise tax reduction was that it would occur even faster than the erosion of motor fuel tax revenue.
“Because fuel efficiency isn’t changing as quickly as the cost of cell service,” Cummings said.
City Administrator Mary McKittrick said staff had started looking at the loss of the telecommunications tax five years ago when the recession hit.
“We looked at all our local government distributive funds, and we started talking to the state because they are, as you know, in dire straits and looking for funding elsewhere,” McKittrick said. “And they continue to look at our local government distributive funds as one of them.”
McKittrick said staff are anticipating a reduction in that revenue source.
“We are very conservative when it comes to projecting those numbers,” McKittrick said. “We do anticipate that this number will continue to decline as with the all other local government distributive funds. We anticipate that the state will take those, or at least a portion of those, as time goes on.”
McKittrick said the decline and impending loss of those funds are something she includes in the budget presentation each year, saying the city needs to look at revenue streams.
“We need to continue looking at our own fees. Obviously, no one wants to raise property taxes,” McKittrick said. “That’s an area the council needs to look at because you’re absolutely right. I agree with you, this is going to decline. Not just this and [motor fuel tax] but the income tax, personal property replacement tax, the use tax. Those are all going to be declining.”
McKittrick said all those sources of revenue either would decline because of a change in cost that reduces the tax, or because the state will appropriate more of those sources to balance its own budget.
According to the telecom tax report, the city received nearly $1 million in revenue from the tax from 2007 through 2010, then about $1.1 million a year through the 2012-13 fiscal year.
Revenue for May was $86,400, down 3.3 percent from May 2012, when it was nearly $90,000.
The telecom tax high revenue projection for the current fiscal year is just under $1.1 million; the low is $873,000, the report states.