North Riversiders who own homes valued at $200,000 can expect the village portion of their property tax bills to go up by less than a dollar next year, after the village board votes to approve a 1-percent increase in its tax levy next week.
North Riverside Finance Director Sue Scarpiniti outlined her reasoning for the 1-percent increase during a village board finance committee meeting on Nov. 12, a recommendation with which the committee agreed. The full village board will vote to approve the 2018 tax levy extension on Dec. 10.
Scarpiniti recommended levying $561,000 to help fund the village’s $18.7 million operating budget during the 2019-20 fiscal year, which is an increase of just $5,736 over the 2017 tax levy extension.
Property taxes represent just 3 percent of the total revenue the village collects to fund operations. With a large retail sales core along the east end of the village, North Riverside generates the most of its revenue – about $10.3 million – through retail sales taxes and its places for eating tax.
The rest of the budget is funded through a combination of intergovernmental taxes, charges for services, fees and fines.
The village’s property tax base is also very low, because for 25 years the village board did not extend the property tax levy. The board resumed the practice of extending property taxes annually in 2014.
Non-home rule communities like North Riverside can extend their tax levies by 5 percent or the level of the consumer price index (CPI), whichever is lower. In 2018, the CPI was calculated at 2.1 percent.
However, Scarpiniti told trustees on Nov. 12 that it would be fruitless to ask for the full 2.1 percent, because of tax cap and limiting rate laws.
“Levying anything larger than this amount would result in no additional tax benefit to the village,” Scarpiniti wrote in a Nov. 7 memo to the finance committee prior to their meeting.
Tax cap laws do allow for municipalities to capture new equalized assessed value of property that’s been newly improved, something North Riverside was able to leverage from 2014 to 2016, with the construction of Costco and build-out of its outlots.
That construction activity has now leveled off somewhat. And while the village has seen the equalized assessed value of all properties increase during the past two years, Scarpiniti said, she expected EAV to drop again due to a combination of tax appeals by major businesses and vacancies created the departures of Toys R Us and Carson Pirie Scott.
The loss of Tony’s Fresh Market and the vacancy that move created will be felt in the future.
“While the previous three tax levy years included sizable new construction growth from the Costco redevelopment plan, the 2018 levy is only anticipated to include minimal new construction growth as the village is primarily landlocked and fully developed,” Scarpiniti wrote in her memo to the finance committee.
One area of continued concern, and something the village board needs to keep an eye on, said Scarpiniti, is North Riverside’s police and fire pension obligations, which continue to grow.
During the 2019-20 fiscal year, which will begin May 1, the village’s total pension obligation is expected to top $3 million. Those obligations have been funded in recent years by red-light camera revenue.
During the 2017-18 fiscal year, the village collected about $2.6 million combined for red-light camera fines and from the state comptroller’s local debt recovery program, which also collects on delinquent red-light camera tickets.
The village expects to collect $2.35 million from those two sources in fiscal year 2018-19.
“With pension costs continuing to rise and the village limited in its ability to raise more general revenues to fund these increases, I continue to urge the board to consider a more stable method of funding the public pensions that is long term in nature,” Scarpiniti wrote.
One way to do that would be to levy a separate tax to fund police and fire pensions. However, said Scarpiniti, voters would have to pass a referendum to establish that tax. In addition, she said, elected officials should push state legislators for pension reform.
“The village must become an active advocate for future reform measures that target the removal of pensions from the tax cap calculation of non-home rule municipalities,” Scarpiniti wrote.
In addition to the $561,000 levy to fund village services, the village board will also levy $240,550 as a guarantee on paying the debt it owes on street improvement bonds issued in 2016.
However, since the village has pledged sales tax revenues to pay that debt, the village board will abate that property tax levy.