The property tax freeze in North Riverside is over.
Every year since 1989, the village board has voted to freeze the property tax levy collected for village services. But on June 15, trustees agreed that the practice would end in December when the board passes its annual tax levy.
In December, trustees are expected to pass a levy that would increase taxes for village services by 5 percent, although the amount collected would probably be lower than that because of the state tax cap.
“We haven’t done it for  years. … We gotta start doing it,” said Trustee Hugh Hermanek.
Extending the tax levy in December will not be a cure-all for the troubles trustees face in trying to craft the village’s 2011-12 budget. In fact, additional tax revenue would not even be available in the present fiscal year, which began May 1.
Trustees are wrestling with a preliminary budget proposal for 2011-12, showing a $2.2 million deficit in the general operating fund. The village doesn’t have enough money in reserve to cover that kind of deficit, meaning trustees either have to come up with new revenues or significant cuts.
In two sessions held last week, trustees failed to put a big dent in that deficit. Trustees will continue their budget workshop at 4 p.m. on June 28 at the North Riverside Village Common, 2401 Desplaines Ave.
The village board, by law, must pass its budget by the end of July. The fiscal year ends April 30, 2012.
Raising property taxes through the annual tax levy would amount to a drop in the bucket. Because the village for the past two decades has levied just $490,000 annually in property taxes, the most it could expect to generate in new revenue through a tax levy increase is 5 percent or the level of the consumer price index, whichever is lower.
For 2011, the CPI is 2.7 percent, meaning the village could expect to gain an additional $13,200 through a tax levy increase. That would equate to about $10-15 in increased taxes per household.
Not that North Riverside residents haven’t experienced property tax hikes over the past two decades. School districts and county agencies have hiked their share of taxes annually and some have passed referendums to raise them even further.
But the village of North Riverside has not raised taxes to pay for services since 1989, the year Richard Scheck was elected mayor. He served until 2009, when he chose not to run for re-election.
During Scheck’s term in office, his village boards also saw to it that the village subsidized everything from water delivery to garbage pickup to vehicle stickers and threw lavish village celebrations on July 4 and North Riverside Day that cost thousands, with little revenue to support them other than general operating funds.
Those practices came under attack last week as two new trustees sought to blame past boards, on which some current trustees served.
“My question to the board is … where have you been for 20 years in office?” asked Trustee Rocco DeSantis, a retired North Riverside police officer who won election in April as an independent. He was the top vote-getter in an election that ousted two longtime incumbent VIP trustees from office.
“Where’s the responsibility?”
Finance Director Sue Scarpiniti said that prior village boards decided against raising the property tax levy because they created other revenue streams, such as a restaurant tax and a non-home rule sales tax.
But Trustee H. Bob Demopoulos said that even during the good years, the village nibbled away at its cash reserves, creating the yawning deficit now facing the current board.
“Even when the economy was doing well, and there was an abundance of money and revenue coming in, we had in the past years a larger reserve fund,” Demopoulos said. “Where’s that reserve fund now?”
The village general operating reserve has diminished over the past decade. In 2001, the village’s general fund showed nearly $3.2 million in cash reserves. By 2006, the reserve had shrunk to $890,000, according to the village’s 2010 financial audit.
The village had a reserve of $3.3 million by the end of 2009-10, but that was largely due to the village taking on $2 million in debt in December 2009 to bolster its general fund.
“When we had the money, we took care of the residents,” said Mayor Ken Krochmal, who succeeded Scheck in 2009. He was a trustee prior to that, since 1994.
DeSantis shot back: “How is that taking care of the residents? That’s taking care of a political party is what it’s doing. It’s not taking care of the residents. Now we have to sacrifice everything for this budget.”
While trustees didn’t put a large dent in the looming deficit, they came to a consensus – generally split in votes of 4-2, with DeSantis and Demopoulos voting no – to raise fees for licenses (business, liquor) and permits (building, electrical, sign, fence, etc.) for a third consecutive year.
The board also agreed to hikes in vehicle stickers from $30 to $35 and parking and compliance tickets from $35 to $50. The base fine for local ordinance violations also will be set at $50.
According to Scarpiniti, the fee hikes will raise just under $100,000 in additional revenue for the 2011-12 fiscal year.
Those increases will need to be voted on by the village board at a later date in order to become law.