By Dawn Neuses, dneuses@qconline.com

Photo: Dawn Neuses Work wraps up on this pavement patching going on in the 3100 block of 16th Street. Moline is spending $900,000 this year on patching projects, which includes utility and street patches. A proposed utility tax would put more money into streets and projects such as patching.

Photo: Kermit Stevenson

Photo:

MOLINE -- The Moline City Council on Tuesday will consider an ordinance creating a utility tax that would rise from 1 percent in 2010 to 5 percent in 2012. The revenue, an estimated $3.2 million per year when the tax is fully in force, would be dedicated to street work.

The ordinance comes to the council for first reading with a 6-2 endorsement from the comittee ofm the whole. A final vote is expected Dec. 1. The tax would, in effect, add 5 percent to everyone's gas and electricity bills.

City administrator Lew Steinbrecher said the streets are "quickly deteriorating" and he supports the utility tax as a way to find the money for substantive improvements.

"Without some new source of revenue, the streets will begin to wear out," he said.

Mr. Steinbrecher said additional funding for street work will result in some new cost to residents, businesses, or both.

"The other alternative is to eliminate services. When I try to propose to eliminate services, that is not popular either. There are no painless alternatives available."

"We are at a critical stage where we've postponed maintenance over the years and it is catching up to us," said city engineer Scott Hinton. "We still have the ability to save most of our streets, but we need to begin doing that soon before they need to be replaced.

"Certainly alleys are in overall very poor condition and a huge number of those need attention. We have 22 miles of sealcoat streets in town, and a large portion of those suffer from drainage issues. There is an awful lot of work that needs to be done," he said.

The city's 2010 budget provides $1.14 million for street work, but the street fund, fed by home rule sales tax proceeds, will have only $714,233. The remaining $400,000 will come from reserves and from the general fiund.

The city will also do nearly $7 million worth of projects with state and federal grants, most of the work on major arterial streets.

Mr. Hinton said the street fund -- primarily used on residential streets -- has been dipping into its reserves the past five years, falling from about $5 million to $1 million. Mr. Hinton said the reserves can no longer supplement street repair, alley and sidewalk projects. They must be kept for emergency repairs, he said.

Alderman Dorothy Armstrong, 7th Ward, who made the motion to impose the utility tax, included language forbidding use of the money for debt service, acquiring property or for construction projects. The Moline School District would be exempt from the tax.

She said the council has discussed a dedicated funding source for street projects each of the seven years she's served, but nothing has been done.

"I feel this is our last resort," she said.

She said the liked Moline's distinction of being the only Illinois Quad-City without a utility tax. "And we have the lowest property tax, but we had to have something. I feel we cannot go on without a designated funding source."

Ald. Scott Raes, 3rd Ward, one of two aldermen who voted against the tax in committee of the whole, said he believes it will make attracting new business more difficult, and that it is regressive.

"Regardless of their means, everyone is paying the tax at the same rate. Everyone is hit at 5 percent," he said. "I don't think in this economic environment it is a good time to implement this type of tax."

He concedes the city isn't addressing the street and alley needs at an adequate rate and has committed to finding an alternative long-term funding source for such projects. He said he plans to present his alternative to the county before the utility tax comes up for a vote on Dec. 1.



Among neighboring cities, Rock Island imposed a utility tax 25 years ago as a way to pay for services during a time of recession, dropping home values and declining sales tax revenues, said city manager John Mr. Phillips. He said the utility tax is a way to capture revenue from non-profit organizations that do not pay property taxes, but do use and benefit from city services.

Since 2003, the utility tax has gone into the city's general fund, Mr. Phillips said. The tax is expected to bring in $1.8 million in fiscal year 2010, he said.

Gaming revenues paid by the Casino Rock Island are now the main funding source for street projects, with $13.9 million earmarked for the next five years. A total of $3.1 million is proposed to be spent in fiscal 2011 on street, sidewalk and alley projects.

In East Moline, the $1.2 million the utility tax generates annually equals about 12 percent of its total budget and goes into the general fund to pay for public services, such as police and fire, said finance director Jim Hughes.

Mr. Hughes said the utility tax is one of the major funding sources for non-home rule municipalities, like East Moline. He said the tax doesn't seem to be a deterrent to business. "No one likes to pay any taxes at all, but it isn't that big of a deal," he said.

Neither Davenport nor Bettendorf have a utility tax, though, as of last year, state law permits it.

Davenport's finance director, Alan Guard, said the law requires 75 percent of any utility tax collected to go toward property tax relief. A utility tax is not under consideration.




Comparison

Rock Island's recommended street, sidewalk and alley projects for fiscal 2010-2011:
Budget: $3.12 million
Source: Gaming revenue
Projects: 
-- Contract street maintenance (includes asphalt and concrete patching, mud jacking, seasonal workers), $725,000
-- Turkey Hollow Road resurfacing and bridge renovation, $325,000
-- 14th Street, 40th Avenue, Watch Hill Road resurfacing, $900,000
-- 30th Street resurfacing, 31st Avenue to Blackhawk Road, $522,973
-- 16th Avenue reconstruction, 22nd to 24th Street, $375,000
-- 50/50 sidewalk, curb and tree replacement program, $50,000
-- 22 1/2 Avenue resurfacing, 25th to 27th Street, $225,000

Moline's recommended street, sidewalk and alley projects for fiscal 2010:
Budget: $1.14 million
Source: Home rule sales tax, $215,000 from reserves and $210,000 from the general fund
Projects: 
-- Temporary technical assistance (for street projects), $50,000
-- Sidewalk 50/50 replacement program, $40,000
-- Arsenal bridge repairs, $75,000
-- Pavement markings, $100,000
-- Traffic signal replacement, $125,000
-- Patching, $750,000