If you live in North Riverside and your property tax bill goes up next year, don’t blame village government. On Dec. 16, trustees voted 5 to 1 to freeze the village’s 2019 property tax levy after the village’s finance director argued that asking for increase might actually result in a further reduction of the levy.
Trustee Marybelle Mandel was the only member of the village board voting against the levy freeze.
The village board directed Cook County to levy $577,830 next year, though North Riverside likely will collect slightly less than that, since the village has experienced tax collection rates between 95 and 98 percent annually since 2014.
Finance Director Sue Scarpiniti in a memo to the village board in November laid out the reasoning for suggesting a one-year property tax freeze. The state of Illinois caps annual property tax levies for non-home rule communities like North Riverside at 5 percent or the level of the consumer price index (CPI), whichever is lower.
For 2019, the CPI is 1.9 percent. While, the village is able to capture additional property tax revenue when total equalized assessed value of property increases due to new construction, that activity has fallen off in recent years.
When Costco was built, the village’s EAV from new construction soared to $4.6 million, Scarpiniti stated in her memo, the highest level in 20 years. Construction at the outlots near Costco added another $1.4 million to the village’s total EAV in 2015.
After that, however, activity leveled off and the village’s EAV began dipping with the loss of major retailers like Carson Pirie Scott. In 2019, Scarpiniti said she expected the village’s total EAV to drop by $100,000, though Cook County won’t have that figure available until mid-2020.
“Because the village is primarily landlocked and any significant new construction values for tax purposes has already been captured, this year will be an extremely difficult one for the village as there is no opportunity to raise substantial revenue from property taxes,” Scarpiniti wrote to the village board in November.
Freezing the property tax levy, however, is seen as a temporary strategy. Scarpiniti also stated that the village should resume extending its annual property tax levy in 2020, since the EAV of currently vacant properties – like the former Toys R Us, Tony’s Finer Foods and Sears Auto Center sites – are under construction and expect to reopen with new businesses next year.
“This strategy will allow the village to maximize our tax collections and capture additional revenue beyond the tax cap limits in those years,” Scarpiniti stated in the November memo.
Property taxes comprise just a small fraction – less than 5 percent — of the revenue North Riverside collects to fund its operations and provide services to residents. It’s largest source of revenue is sales taxes.
One of the reasons property taxes remain so low in North Riverside is that for a period of about 20 years, village boards froze the annual property tax levy – even during years where the village experienced significant new development, whose added EAV would have resulted in more revenue.
As a result, the village doesn’t collect enough in property taxes alone to fund even its police and fire pension obligations. In 2020, that expense alone is expected to cost the village a little more than $3 million.
The state does allow municipalities to levy taxes to fund police and fire pensions, and those levies are not subject to tax caps. However, for the village to begin doing that, it would have to pass a referendum.
Pensions in large part are now funded by the collection of fines generated by the village’s red-light cameras. However, that revenue has also begun to level off and the firm the village uses to administer its red-light camera program, SafeSpeed LLC, is under federal scrutiny as part of what looks to be a wide-ranging federal corruption probe of area politicians.
Neither the company nor any of its employees have been charged with any wrongdoing.
“I continue to urge the board to consider a more stable method of funding the public pensions – one that is longer term in nature,” Scarpiniti wrote.