Switching to Lake Michigan Water & Non-Home Rule .5% Sales Tax Increase

In 2011 Lake Zurich voters approved a .5% Non-Home Rule Sales Tax Referendum for expenditures on municipal operations, expenditures on public infrastructure, or property tax relief. In August 2024 the Governor signed HB3144 giving Illinois non-home rule municipalities the authority to enact an up to 1% local sales tax on general merchandise by local ordinance.

The Village has increased the local non-home rule sales tax by 0.5%, bringing the total local sales tax to 1%. The additional 0.5% are dedicated to reducing the financial impact of bringing Lake Michigan Water to the community.

Planned project increased per 1,000 gallons are:

• 2024 - $3.00
• 2025 - $1.50 (cumulative amount $4.50) 
• 2026 - $1.50 (cumulative amount $6.00) 
• 2027 - $2.00 (cumulative amount $8.00) 
• 2028 - $2.00 (cumulative amount $10.00) 

No. The Non‐Home Rule Sales Tax is not charged on titled personal property such as cars, trucks, trailers and snowmobiles, nor does it apply to medical appliances and corrective eyewear. 

The sales tax increase would apply to tangible goods and prepared food, including clothing, grooming/hygiene products, electronics, appliances, housewares/home décor, readily consumed foods and beverages, restaurant sales, alcohol sales, soft drinks and candy.

• Palatine 10%
• Schaumburg 10% Cook County side / 8% DuPage County side
• Barrington 9% Cook County side / 7% Lake County side
• Long Grove 9%
• Libertyville 8%
• Mundelein 8%
• Lake Zurich 7.5% <--current rate
• Vernon Hills 7.25%
• Kildeer 7.5%
• Deer Park 7.5%
• Wauconda 7%

The total sales tax rate is 7.5%. Here is how the rate breaks down:

• 6.25%: State of Illinois (1% of this is shared with the Village)
• 0.75%: Regional Transportation Authority
• 0.50%: Lake Zurich non-home rule sales tax

No. For the next 30 years, that money would be earmarked specifically to finance the Lake Michigan pipeline project. 

Lake Zurich’s sales tax, currently 0.5%, is paid by anyone who buys goods in town — and that includes people who don’t live in town. Approximately 40% of Village sales tax revenue is produced by out-of-towners who shop and dine in Lake Zurich, according to current data. Therefore, their dollars will substantially help pay to bring Lake Michigan water to town. 

Sample 2028 utility bill with a 1% local sales tax (you save $5 per 1000 gallons)

The Lake Michigan water infrastructure project is the largest infrastructure initiative ever undertaken by the Village. About 33% of the $154 million water project cost would be funded by the sales tax. That means out of towners will contribute roughly 17% of the total project cost through their sales tax contributions.. The additional sales tax will generate between $2.5 and $2.7 million a year. This would enable the Village to reduce future water rates for water customers. Additional information on financing considerations can be found here. 

A property tax increase places the entire burden of bringing Lake Michigan Water to Lake Zurich solely on residents. Increasing the non-home rule sales tax reduces the water bill for every household because non-resident shoppers are contributing about 17% to the overall project costs and debt retirement.

Since 2011, the Village has used this money to pay for infrastructure upgrades — specifically roads. Investments have been made in capital projects such as road programs, concrete curb and sidewalk replacement and crosswalk enhancements. 

Radium and barium must be removed from our well water. The Village currently does a very good job of removing radium and barium from water obtained through the deep aquifer. In the future, however, the cost and liability burden and storing radium will grow and become untenable. Lake Michigan water is both high quality and limitless. It is in the Village’s long-term best interest to make this change now. 

Visit this site for a all of the information that has been accumulated.

The least expensive time to do this is now. The Village Board unanimously decided in March 2024 to not delay any longer as this project will only cost more in future years. Wauconda voters approved its financing structure in 2012 and began piping Lake Michigan water in late 2019. The cost of money and interest rates for long-term financing (plus the inflationary pressures the economy has experienced in recent years) have increased significantly since Wauconda connected.

The Village will transition to Lake Michigan water in the next three to four years. Staying on the deep aquifer system would require comparable long-term investment costs, but with greater long-term risks. 

The approximate route is known and is currently being studied in greater detail. You can see the route in the images below and find much more detail online here.

There is limited pipeline capacity via that route. The pipeline connection and infrastructure was built only to serve those communities within that agreement, which is Wauconda and Volo. Simply put, those pipes could not handle Lake Zurich’s water demand.

The water inlet to the processing plant is about 3,000 ft from the shoreline in about 25 ft of water.

The decision to transition to Lake Michigan Water (LMW) vs. staying with our present deep well systems is extremely complex. Visit this site for a all of the information that has been accumulated in the past 3 years through the most comprehensive study ever undertaken.

Communities must apply and be granted their own allocation of Lake Michigan Water. The water pipe that will supply Lake Zurich will be owned and maintained by CLCJAWA. It is that board that will decide if neighboring communities that have received an allocation are able to obtain water from it.

In Illinois, most small communities under a population of 25,000 are non home rule. Lake Zurich is a non-home-rule community. This means the Village has limited power to implement new taxes and fees, and are subject to property tax caps. Home-rule communities can raise their local sales tax through a local ordinance without voter approval.. 

The short answer is: Yes. The Village has been treating the deep well water and removed radium from what we send into the drinking water system. This process accumulates the radium which is then sent directly into the waste water stream. The agency that treats our waste water, Lake County, has provided guidance to take steps toward removing all of the radium from our waste water stream.

Lake Michigan water is both high quality and limitless. It is in the Village’s long-term best interest to make this change now. 

We studied various options of removing the radium from the well water and having it hauled away. The cost of installing equipment, that is not fully proven, is nearly the same as switching to Lake Michigan Water. The Village would continue to be responsible for the hauled away waste even after it arrives at the disposal site. Essentially, we would be in the radium production business with all of the hazards and regulations that come along with it. None of this is required with Lake Michigan Water.

View the slide deck and recording of the presentation provided to the Village Board on treatment options.

In other words, is kicking the can down the road an option...

The long term sustainability of the aquifer as the water source for Lake Zurich is questionable since the water contained within is being depleted at a faster rate than it is replenished. The overwhelming issue is the radium and barium that is contained in water obtain from the existing deep wells. Radium and barium removal is required before the water is sent into the distribution network. Lake County has advised us that continuing to send our backwash containing concentrated radium and barium needs to come to an end. Alternative methods to remove the radium and transporting it to offsite storage are unproven at the scale Lake Zurich requires and are nearly as costly as switching to Lake Michigan Water in the first place.

There are two sections dedicated to all of the details on the transition to Lake Michigan Water.

• Considering Lake Michigan Water as our next water source. Are there other options?
• Switching to Lake Michigan Water - Funding & construction timeline