Homeowners in North Riverside will experience a very modest increase in the taxes they pay for village services in 2018 — about $1 for the average homeowner, according to officials — but the amount of money the village must set aside each year for police and fire pension obligations may change that in the future.
At a meeting of the village board’s finance committee on Nov. 6, trustees agreed to accept a recommendation by Finance Director Sue Scarpiniti to seek a tax levy increase of 1.5 percent in December, to be assessed next year.
In all, the tax levy extension is expected to bring the village an additional $12,000 total in 2018. The total amount of property taxes collected village-wide for municipal services will amount to about $550,000.
Only about 2.4 percent of the annual property tax bill paid by a North Riverside homeowner goes toward village services. The rest goes to fund schools, Cook County and other taxing districts.
But pension obligations could change that. Right now, the village funds its fire and police pension obligations through revenue collected from red-light camera violations. However, pension costs continue to rise.
By the end of the 2018-19 fiscal year, the village’s pension obligation is expected to have grown since 2015 by 51 percent — almost $1 million.
The state of Illinois allows municipalities to levy funds, regardless of tax caps, to fund pension obligations. However, to begin levying that tax, the village would have to pass a referendum.
While the subject has surfaced in the past as a way to meet pension costs, Scarpiniti emphasized it as an option in her memo, which served as the basis of the finance committee discussion on Nov. 6.
“With pension costs increasing another $238,000 next year, I believe the time has now come to explore a public referendum to fund our public pension systems,” Scarpiniti wrote, suggesting the “next general election” as a possible time to do so.
Each year, non-home rule communities, like North Riverside, are afforded the ability to extend their tax levies within the framework of Illinois tax cap laws. Generally speaking, that means municipalities can increase property taxes annually by 5 percent or the rate of the consumer price index (CPI), whichever is lower.
The CPI hasn’t reached 5 percent in more than a decade, and since 2008 the CPI has been more than 2 percent just twice. The CPI for tax year 2017 (for taxes paid in 2018) is 2.1 percent.
But other factors can affect the extent of an annual tax levy. If there has been a boom of new construction, for example, municipalities might be able to collect more than the CPI because those properties aren’t immediately subject to tax caps.
In 2014 and 2015, for example, the construction of Costco and development of outlots along Harlem Avenue added millions in property assessments to the village’s tax base. But in 2016, that construction leveled off and is expected to drop again in 2017 to about $300,000 in total new property assessments. The total value of new property won’t be finalized until summer 2018.
Cook County also applies what it calls a “limiting rate” to tax levy requests. According to Scarpiniti, the effect of the limiting rate on North Riverside’s 2017 tax levy request makes it fruitless to request a tax levy extension of more than 1.5 percent.
“Levying anything larger than this amount would result in no additional tax benefit to the village due to the tax caps and limiting rates,” Scarpiniti wrote in her memo to the finance committee.