Arlington Heights residents could soon pay a tax for using streaming services, under a budget proposal being considered by the village board.
AP
Your Netflix bill in Arlington Heights could soon include a new tax from village hall.
Village officials are considering an extra charge on streaming services to help fund staffing for a fifth fire department ambulance that is hitting the streets this year, amid increased call volumes.
Meanwhile, some village trustees this week pushed back on whether to retain a 1% grocery tax the state will stop collecting at the end of the year.
Talk of taxes comes as village department leaders kick off the annual budget planning process ahead of discussion and approval by the village board at the end of the year.
The proposed 5% streaming tax would help augment declines in cable franchise fees and telecommunications tax revenues. Officials say cord cutting has correlated to cuts in revenue the village receives, from about $5.5 million two decades ago to just below $3 million today.
At the same time, village leaders contend streaming services still require use of public rights of way for cable lines or repeater stations to deliver entertainment to residents and businesses.
“We still have to maintain that, and it has to be dealt with every time they tear it up and do work,” Village Manager Randy Recklaus said during a board committee discussion Monday night.
Added Mayor Jim Tinaglia: “We really haven’t been able to recapture what we were getting before that industry changed. It’s just important to keep that in mind before someone complains, ‘Well, why another new tax?’ You’ve just been getting a break because it’s changed.”
Jim Tinaglia
Under a hypothetical scenario, a resident who subscribes to Netflix, Prime Video, Disney Plus, Peacock, Hulu and YouTube TV with commercials would pay a $41 annual tax to the village. Without commercials, the tax would be $61, village officials estimate.
It could mean $500,000 for village coffers per year to help cover the personnel costs of six paramedics to staff the ambulance.
The village is budgeting $1.12 million next year for the new positions, while this year is planning to pay $292,000 of overtime for current paramedics working on the new ambulance during peak times. Finance Director Melissa Gallagher said a minimal property tax levy increase might also be needed as the ambulance fully comes online in 2026.
Already, Gallagher is estimating a 3.63% levy hike this fiscal year — mostly attributable to losses in pension fund investments for police and firefighters.
Gallagher and Recklaus have also recommended the board keep the 1% grocery tax that is otherwise due to expire statewide at the end of the year. They say losing the tax would create a $1.3 million budget gap and could lead to service reductions and property tax hikes.
“Savings to households would be very moderate, but to us it would be a pretty sizable hole,” Gallagher said.
Without the grocery tax, it could mean a 7% property tax increase on homeowners, village officials predict. Without the grocery tax and new streaming tax, it could be a 8.25% levy increase, they said.
Melissa Gallagher
But Trustee Wendy Dunnington suggested the village tap other possible revenue sources, such as taxes on plastic bags, gambling or short-term rentals, or using reserves.
“It really makes a big difference for families and people that are on fixed incomes,” she said of the grocery tax. “You can choose if you have Disney or Netflix, but you can’t choose if you are going to purchase food or not.”
Wendy Dunnington
Trustee Bill Manganaro agreed, while Tinaglia asked village staff to come up with a list of “choice driven” alternative taxes such as alcohol and tobacco for the board to debate.
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