Elgin must subscribe to different philosophies in how it finds revenue and where it looks for new business, Mayor David Kaptain said Tuesday during his State of the City address.

Kaptain addressed the Elgin Area Chamber of Commerce, noting city finances and new initiatives for a Sister Cities International program, among other challenges and goals.

With the decline in funds from the Grand Victoria Casino, plus other financial hits on Elgin’s economy, Kaptain explained there must be a new approach to capturing city revenue. The casino is expected to bring in about $12 million in the coming year – that’s about half of previous years’ funds, Kaptain said.

Depending on the casino for capital projects and non-profit funding isn’t realistic, he said. Neither is a reliance on property taxes. Property values have dropped to unforeseen lows in recent years, Kaptain said.

“Elgin really got caught in a perfect storm,” he said, also noting drops in other tax revenue. The city hasn’t created a new revenue stream since 2005, Kaptain said, until now.

The proposed 2012 budget includes new taxes on gas and electricity, as well as a 3 percent alcohol sales tax. The sales tax will also increase from 0.75 percent to 1.25 percent, should the budget pass. A final vote is expected Dec. 21, but a majority of the council has already signed off on the plans.

Those new revenue sources will allow the city to become more sustainable, and lessen the city’s reliance on property taxes, which will decrease over time, Kaptain said.

The plan offers residents and businesses some control, he added.

“Property tax is not a choice,” he said, but the amount of gas, electricity or alcohol one purchases is. Conscious consumers can control their use of utilities and alcohol purchases, he said, and therefore can control the amount of tax they pay.

Kaptain also said he’s met with Gov. Pat Quinn, who suggested Elgin officials start looking at forming relationships with other countries to recruit new business, specifically China.

“He issued a challenge to us to look beyond our borders,” Kaptain said. Elgin will try to reach out to other parts of the world as a potential new location for businesses, he said.

Elgin’s first sister city may also be in the works as city officials work to strengthen a relationship with a South American town, Kaptain said. Elgin has never had a formal sister city, which allows residents and others in the community to participate in exchange programs. A sister city would also possibly drive new business, he said.

Next month, the city will begin developing a strategic plan, which will be a public process to identify future goals, Kaptain said.

“The process is very similar to what our budget process was,” he added, noting budget plans were made public in various forms, including the city’s website, on Facebook pages and through other forms of media.