Riverside is looking to change the way the village finances street improvements.
At the village board’s June 6 meeting, trustees directed staff to move forward with preparing a referendum question asking residents whether the village should institute a one-time increase to the property tax levy for 2024. That increase would be offset by savings as current street repair bonds are paid off.
If passed by voters in November, the referendum will allow the village to invest about $500,000 more into street improvements over the next 10 years than it did over the past decade — without raising property taxes a cent.
What would the referendum do, exactly?
The draft referendum presented to trustees reads as follows: “Shall the extension limitation under the Property Tax Extension Limitation Law for the Village of Riverside, Cook County, Illinois, be increased from the lesser of 5% or the percentage increase in the Consumer Price Index over the prior levy year to 9.3% per year for 2024?”
According to the Illinois Department of Revenue, the Property Tax Extension Law Limit ensures that annual increases in property taxes don’t skyrocket when inflation does. Under PTELL, these increases must match the previous year’s Consumer Price Index inflation rate, but they’re capped at 5% in years when the CPI is higher. Tax levies can only go above what PTELL dictates with approval from voters.
Essentially, if the referendum passes, property taxes in Riverside will increase by 9.3% for fiscal year 2024 compared to the year before. The village board would also be required to pass an ordinance allowing Riverside to earmark the portion of the tax levy collected each year that is for street improvements.
Property tax increases for future years will remain at or under 5%, but the extra revenue that the village collects as a result of the increase — about $265,200 annually, according to village documents — will have a lasting effect due to the cumulative nature of annual tax levies, Village Attorney Victor Filippini said.
“If anyone’s concerned that we’re letting Pandora’s box open and [the tax levy increase will] run rampant on us forever, no,” Filippini said. “It’s a one-time shot in the arm to increase the levy for our standard amounts of taxes.”
While the village would collect nearly 10% more revenue from its portion of a resident’s property taxes, the change would be tax-neutral for Riversiders. The increase in property taxes will go into effect at the same time that the village pays off existing debt, which would normally decrease property taxes. Instead of putting that revenue toward the debt, Riverside can put it directly into improving the village’s streets.
“There is a real savings, but it won’t necessarily be on the tax bill itself,” Filippini said. “The tax bill should be stable, whereas the savings are in the amount available for roads.”
What if it fails?
While Riverside voters will have the option to shoot the referendum down, doing so could have disastrous consequences for the village’s streets, according to officials.
Village President Doug Pollock said Riverside would have a few options to move forward with street improvements if voters do not pass the referendum.
“Well, one would be to do nothing and just let our roads fall apart. That’s an option,” he said, though he later clarified he was exaggerating. “The other option to continue with the funding would be to come back for a separate referendum … asking to borrow money, as we did twice in the last 20 years.”
“If it doesn’t pass, then we will probably have a significant reduction in our road program for the calendar year 2025 because there won’t be the revenue,” Filippini said.
In that case, he said, a third option would be for Riverside to “zero out its road and bridge tax in 2024” in order to seek a referendum next year that would implement an exclusive tax for street improvements.
“We’re not going to be completely handcuffed, but we will see a decided drop in revenues available for road purposes unless you make other changes in your priorities,” he said.
Trustee Elizabeth Kos raised concerns about implementing a new tax next year if this year’s referendum fails.
“That referendum would have the verbiage of, ‘Would you like us to have a new tax,’ as opposed to the convoluted wording that’s here,” she said. “It will actually say, ‘New tax,’ in the new one, which I feel will be even harder to pass.”
Moving away from bonds
The existing debt that will expire when the referendum would go into effect is a consequence of how the village has financed its street improvements up until now.
For the past two decades, Riverside has paid for its roads by issuing 10-year bonds. In 2004 and again in 2014, the village put forward a referendum asking residents if it could issue more than $2 million in bonds to cover the next decade of improvements. Both times, around 80% of voters approved the referendum.
While issuing those bonds allowed the village to repair and maintain its streets, the funding didn’t come without a price. According to a village memo, Riverside paid out $532,721 collected from property taxes over the past decade to cover costs associated with issuing the bonds, like interest and attorneys’ fees.
With the debt from the 2014 referendum set to expire after this year, Riverside officials have decided to look for a more sustainable way forward in the form of the permanent tax levy.
“In layman’s terms, for 20 years, we’ve borrowed money to maintain our streets. Borrowing money for something that will never go away is just not prudent. It’s just not responsible, in my opinion,” Pollock said at the meeting.
“We’ve lost out on maybe a million dollars’ worth of street improvements by borrowing money the last 20 years,” he added. “That’s a whole street that we could have done in addition to the ones we did do.”
Correction, June 20, 3:30 p.m.: An earlier version of this article misstated which village paid out $532,721 from property taxes over the past decade to cover the costs of issuing bonds for street repairs. That village is Riverside. We apologize for the error.
