Riverside is no doubt a larger municipality than North Riverside in terms of its residential population. The 2010 Census shows that Riverside has 8,875 residents to North Riverside’s 6,672.
It also can’t be disputed that residential property values in Riverside generally are greater and produce more property tax revenue.
But what boggles the mind is the difference in the amount of money each village levies in taxes annually to pay for the basic services it provides.
North Riverside will levy about $500,000 in property taxes to pay for its operations in 2013, the result of a conscious decision almost a quarter-century ago to freeze the village’s annual property tax levy.
Riverside will levy more than $4.4 million. The basic math will tell you that Riverside is levying about nine times more in taxes than its neighbor to the north. Can Riverside’s residential properties be that much more valuable than all of North Riverside, including its vast area of commercial property – which is assessed at a higher level than residential property?
Conventional wisdom in North Riverside has been that raising the village’s portion of property taxes would amount to so little money, it’s not worth adding to the residents’ burden. In any case, sales taxes in the past have been sufficient to allow the village to forego the levy increase.
But the past couple of years have proven the danger of such a strategy. When the economy crashed in 2008, sales taxes took a nosedive. The village took out a short-term $2 million loan to pay the bills and subsequently found itself unable to pay back the debt in 2011. North Riverside had to take out another loan to do that.
While sales taxes are recovering, the village now faces the prospect of about 12 months without revenue from its largest sales tax producer, Edward Don.
Costco may indeed replace or surpass the revenues Edward Don provided, but the village will have to use at least a portion of those taxes for the next several years to pay back the nearly $7 million debt (plus interest) North Riverside is taking on to make Costco a reality.
And what about the village’s pension liabilities? North Riverside has consistently chosen to not fund its pension obligations because it didn’t have the money to do so. The village did make pension payments in 2011 but only after selling off a village asset. Those pension obligations continue to grow and continue to be either unfunded or underfunded. A full contribution would cost the village – between police and fire pensions – more than $1 million annually.
Part of that problem can be linked directly to the village’s failure to increase its tax levy for almost 25 years. Sure, extending the tax levy now will only net the village $16,000, because the village has failed to extend the levy in the past. The tax levy is cumulative. A tax dollar not levied in the past is a tax dollar you can’t levy in the future. It’s gone forever.
That’s how Riverside levies $4.4 million, while North Riverside levies $500,000. The cost of government services will continue to rise, and North Riverside will continue to scramble to meet its obligations.