North Riverside will continue its recent practice of annually increasing its share of property taxes when trustees vote on Dec. 12 to extend the tax levy by 1.9 percent.
State tax cap laws limit annual levy increases to 5 percent or the rate of the consumer price index (CPI), whichever is less.
In 2016, the CPI is 0.76 percent. However, new construction in the village, such as the new AAA Car Care Plus, which was built in 2016 on one of the Costco outlots along Harlem Avenue and Miller Ale House at the North Riverside Park Mall, is not subject to tax caps.
As a result, the village will ask for more than the level of the CPI in order to capture as much of the value of the new construction as possible.
But the 2016 levy will reflect new construction value of about $300,000, compared to the 2015 levy, which included redevelopment of the Costco outlots and other improvements that added $1.4 million in new construction value.
According to Scarpiniti, North Riverside should see about $10,000 more in property taxes collected as a result of the 1.9 percent extension. The impact to the owner of a home in North Riverside valued at $200,000, said Scarpiniti, is about $2 more. For homeowners with a senior citizens’ exemption, the increase will be even less.
North Riverside’s share of the average property tax bill is less than 3 percent of the total. The reason for such low local property taxes was a policy that froze the local tax levy for more than two decades.
Scarpiniti said that the average North Riverside homeowner pays about $108 per year to the village out a total tax bill of between $4,500 and $5,100, depending on which township the resident lives in. The amount is less, about $84 annually, for those with a senior citizens’ homeowner exemption.
While that kept taxes low for local homeowners, it meant that the village banked on local sales tax revenues to pay the bills. The recession of 2008-09 hammered sales tax revenues and also depressed local property assessments.
North Riverside has seen eight straight years of declining equalized assessed value of its property. Its gross equalized assessed value has fallen from $374.5 million in 2008 to about $227.6 million in 2016 – a drop of 39 percent.
At the same time, the village has seen its police and fire pension obligations rise, in part because of a decision by past village boards to balance annual operating budgets by failing to adequately fund pensions.
In addition, the village is seeing even more pension pressure because of new state laws changing the way actuaries calculate pension obligations. As a result, North Riverside expects to see its pension obligations climb by about $400,000 for fiscal year 2017-18 compared to the amounts the village contributed in 2015 and 2016.
In the 2017-18 fiscal year, North Riverside expects to have to pay $2.6 million combined for police and fire pensions. That’s almost five times what the village levies in property taxes each year.
The village is allowed to levy taxes for the purposes of funding pensions, but it has not done so in the past. And in order to do it now, according to Scarpiniti, the village would have to pass a referendum allowing it.
“With pension costs increasing by $400,000 next year, if the village board should wish to explore a public referendum to fund either the police and/or fire pension funds, a separate discussion outside the tax levy process would need to be held for inclusion of the referendum question at the next general election,” Scarpiniti wrote in a memo to Trustee Vera Wilt, the village board finance committee chairwoman on Nov. 14.