North Riverside trustees have agreed to freeze the village’s tax levy for the second consecutive year, brushing aside the village administrator’s recommendation to extend the levy by 2.5 percent in order to capture a modest amount of property value growth due to new construction.
Administrator Sue Scarpiniti urged trustees to capture as much revenue as possible through the annual property tax levy in the wake of a year during which a pandemic wreaked havoc on critical sales tax revenues.
“We have a very limited ability to raise additional dollars,” Scarpiniti told trustees at a meeting of the village board’s administrative committee on Nov. 9.
Non-home rule municipalities, like North Riverside, are limited by state tax cap laws on how much they can increase property taxes annually. State law allows a non-home rule village to extend their tax levies by 5 percent or the level of the consumer price index (CPI), whichever is less.
For 2020, the CPI is 2.3 percent. Scarpiniti recommended the 2.5-percent extension in order to capture about $20,000 in property tax revenue that would result from levying the full amount on newly improved properties. Tax caps do not count against new property growth.
Compounding the financial predicament for North Riverside, said Scarpiniti, was the village police and fire pension obligations, which she predicted in the 2021-22 fiscal year to top $4 million.
Because village boards for more than an entire generation chose to freeze property tax levies, it forever prevented North Riverside from collecting hundreds of thousands of dollars from both residential and, perhaps more critically, commercial properties.
In the past couple of years, with retail operations like Sears and Carson Pirie Scott disappearing, the equalized assessed value of all property in North Riverside has actually declined, making the village more dependent than ever on revenue streams like sales taxes and taxes on the sale of food and beverage at restaurants and bars.
Those revenues, already under pressure due to the changing face of brick-and-mortar retail sales, have been hammered during the pandemic. Due to decades of freezing property tax levies, North Riverside collects less than $600,000 in total property taxes. The average homeowner, according to an analysis by Scarpiniti, pays roughly $110 in property taxes annually to fund village operations.
“I know $20,000 doesn’t sound like a lot, but given the fact that we’re really struggling as a non-home rule community to raise additional revenue, we don’t have sufficient reserves to meet those kinds of increases [to pensions].”
But trustees pointed to the pandemic as a reason to freeze the property tax levy.
“I don’t see how this can be an advantage to us [to extend the tax levy],” said Trustee H. Bob Demopoulos. “I’m usually all in favor of capturing the county’s incentive when there’s new construction, but at this point everything is so upside down with COVID, and we don’t know where it’s going and [$20,000] is rather minuscule.”
Other trustees present at the committee meeting – Terri Sarro, Fernando Flores, Marybelle Mandel and Joseph Mengoni – all agreed with Demopoulos. Mayor Hubert Hermanek Jr. said he supported extending the levy by 2.5 percent per Scarpiniti’s recommendation.
“One of the reasons we get such a small amount [in property taxes] is because prior boards, prior to 2008, had a freeze on property taxes and it kind of caught up to us and bit because we were so far behind,” Hermanek said. “[A freeze] sounds nice but the reality is that every penny that this village can come up with, including property taxes which is such a small amount compared to other villages, is necessary.
Trustees will vote on the 2020 tax levy ordinance at their meeting on Dec. 14.