Even as homeowners in Brookfield and Riverside may feel like their property tax bills are going higher and higher – the amount of property tax money going to directly fund municipal services has been dropping steadily for the past several years.
That’s not to say that the municipalities’ overall share of the property tax bill has been falling – it goes up a bit each year based on the state’s tax cap formula – but the money collected is being funneled away from services to pay pension obligations for police and firefighter pensions.
At the end of every calendar year, each municipality estimates its tax levy “extension,” meaning the amount by which a town can increase its property tax levy. Every year towns are faced with higher costs for salaries and benefits of current employees, and extending the tax levy helps pay for those increases.
The trouble is the cost to towns like Brookfield and Riverside for paying police and fire pensions has become more than they can match by simply increasing the tax levy.
But first a bit of background on how it all works. Non-home rule communities – any town with less than 25,000 residents, like Brookfield and Riverside – are limited in their capacity to raise property taxes annually. Illinois tax cap laws limit any annual increase to 5 percent or the rate of the Consumer Price Index (CPI), whichever is less.
For the past several years, the CPI has been well below 5 percent. For the 2016 tax levy extension, the CPI was 0.73 percent. In 2017, the CPI is 2.1 percent.
Municipalities are also allowed to capture the tax value of new construction. Depending on how much new development has been completed, the total amount a municipality can end up levying is a bit more than the CPI.
But municipalities extending their tax levies in December 2017 won’t know the value of that new construction until the middle of 2018, when Cook County calculates the value. So the tax levies are estimates, and local officials will sometimes ask for a higher levy, hoping to capture the entire value of new construction without knowing exactly what it is.
If a village has levied an amount that exceeds CPI plus the value of new construction, Cook County will limit the tax levy extension, and it more often than not ends up being pretty close to CPI.
Anyone looking at Brookfield’s 2017 extension request will see that the village is asking for a tax levy increase of about 9 percent. Riverside is asking for an increase of 4.65 percent.
But neither village will end up collecting anywhere near that amount.
For example, the village of Brookfield in December 2016 asked for a tax levy extension of 4 percent in order to capture as much of the value of new construction as possible. Brookfield has been experiencing something of a residential building boom in recent years.
The village got far less than that when taxes were collected in 2017.
The amount of property taxes actually collected by the village of Brookfield from its 2015 tax levy (for taxes collected in 2016) was $7,949,486. While it asked for a 4-percent extension in 2016, the amount the village actually collected from its 2016 tax levy (collected in 2017) was $8,020,596.
That’s an increase of just 0.9 percent, more in line with the 2016 CPI of 0,73 percent. The tax levy extension resulted in Brookfield collecting just $71,110 more in 2017 to provide municipal services than it did in 2016.
The village of Riverside sought a 3.75 percent tax levy extension in 2016, but when the dust settled in 2017 it collected taxes that amounted to a 0.9 percent increase (just $44,009) over the amount of taxes collected in 2016.
During that same time frame, the village of Brookfield’s annual fire and police pension obligation grew by $322,491. Meanwhile, Riverside’s pension burden increased during that same period by $288,108.
In fact, Riverside’s annual police pension burden (it does not have a fire pension obligation because it does not have a full-time fire department) has increased by 90.6 percent since 2014, from $695,931 to $1,326,236.
Since 2014, Brookfield’s annual fire and police pension obligation has increased almost 34 percent, from about $2.3 million to an expected $3.05 million in 2018.
As pensions have increased, the amount levied per year for general operating expenses in Brookfield, not including police and fire protection, has fallen from $1.57 million in 2014 to $1.38 million for the 2016 levy, collected in 2017.
The story in Riverside is similar. The village’s levy request for general operations in 2014 was roughly $1.2 million. Because of increasing pension obligations, Riverside has shifted its funds from operations to pension obligations.
In its 2017 levy request, Riverside is earmarking just $740,279 to fund general operations, a decrease of almost 39 percent since 2014.
Riverside’s 2018 police pension obligation is just a little less than the $1.34 million budgeted in 2018 to operate the fire department. The police pension obligation alone represents 27.5 percent of the village’s entire 2017 tax levy request.
Police and fire pensions in Brookfield represent 35 percent of that village’s 2017 tax levy request.