After freezing its local property tax levy for the past two years, North Riverside trustees agreed at a meeting of the village board’s administrative committee on Nov. 8 that they’ll ask for a 3-percent tax levy increase for the 2021 tax year, which is collected in 2022.
It’s also the largest tax levy increase the village has sought since 2015, when the board sought a 3.5-percent increase. But, according to Village Administrator Sue Scarpiniti, the 3-percent increase won’t make a very big dent in the wallets of local homeowners, with the expected hike estimated to be around $10 to $25 depending on the assessed value of a particular home.
“The biggest hit will be to the businesses, because their assessments are higher,” Scarpiniti told trustees. “But what taxpayers will pay to North Riverside will be minimal compared to other taxing bodies.”
Trustees H. Bob Demopoulos and Marybelle Mandel said they both opposed increasing the tax levy, with Demopoulos saying it was both “too much of a big hit” and also that the $13,000 total levy increase was such a small amount it wouldn’t make much of an impact compared to the sales taxes coming in from a new grocery store and the village’s places-for-eating tax.
Mandel said she opposed it because she didn’t want to place a burden on businesses.
“I see the businesses taking a hit right now with employment, cost of goods, and I definitely don’t want to see them struggle or we’re going to end up with more vacant stores,” Mandel said.
Trustee Jason Bianco argued that raising the tax levy was critical given the costs to operate the village.
“How can we continue to provide these services on $125 a resident?” said Bianco, referring to the amount the village collects annually in property taxes from the average single-family residential property. “We’ve pretty much maxed out our eating taxes, our sales taxes. We sat here at the budget [workshop] $2 million in the hole and we couldn’t figure out anything.”
Trustee Terri Sarro, who chairs the administrative committee, said that while freezing the tax levy made sense in the midst of last year’s pandemic, the village couldn’t afford to keep doing that, especially with the village’s combined police and fire pension obligations ballooning to almost $4.2 million in 2022 – which is seven times greater than the total property tax levy the village takes in annually.
The village’s pension obligation in 2022 is increasing by more than $500,000 over what it was obligated to pay in 2021. The village’s total tax levy in 2021 was $561,000.
“Doesn’t it make sense going after the tax levy every year barring a catastrophe?” said Sarro, responding to Demopoulos’ argument that raising increasing the levy wouldn’t help much because the additional amount collected was “peanuts.”
“Why wouldn’t we [raise the levy]?” Sarro asked. “Our property taxes of what comes to the village are peanuts.”
Property taxes collected specifically for the village of North Riverside are far less than what neighboring municipalities collect, because from 1989 until 2014 elected officials chose to freeze the local property tax levy and depend instead on sales taxes and other revenue streams to fund the cost of village operations.
As a result, the typical single-family homeowner pays about $125 per year in property taxes to fund municipal operations, about 2 percent of the total annual tax bill. In other communities, property taxes paid directly to the municipality account for a much bigger slice of the overall bill.
In the Proviso Township portion of Brookfield, for example, the village accounts for about 20 percent of a homeowner’s tax bill. In Riverside, it’s about 15 percent.
That’s because over time, those villages increased their tax levies by the amount allowed under state law — by 5 percent or the level of the consumer price index, whichever is less.
For 2021, the consumer price index is 1.4 percent, but municipalities often request an increase higher than that to capture the full value of any new property development, which is not capped the first year it appears on the tax rolls.
While there was plenty of commercial property development in North Riverside between 1989 and 2014, the village never collected property taxes reflecting the value of that improved property. Its failure to do so has resulted in the fact that while North Riverside Park Mall, for example, may pay a total tax bill of more than $4.3 million annually, the village only receives about $93,000 to fund its operations.
By increasing its tax levy by 3 percent, North Riverside is hoping to collect about $13,000 more in property taxes than it received from its 2020 tax levy. While that’s not a large increase, by levying what’s allowed under state law, the village can capture the value of new development reflected in the 7-percent increase in the village’s equalized assessed value of property in 2020.
With other new construction wrapping up or about to begin – at the old Jewel grocery store site, at Zeigler Ford and for a new Aldi at North Riverside Park Mall – Scarpiniti said it would be her recommendation for the village to routinely increase its tax levy annually in the future to begin compounding it.
“Over time [the property tax base] does build,” Scarpiniti said. “I know $13,000 doesn’t sound like a lot, but over 10 years that $13,000 becomes $13,000 on top of an extra 10 and it starts to compound.”
