Brookfield Finance Director John Dolasinski unveiled the village's preliminary property tax levy for 2006 on Oct. 24, which calls for an increase of just over 7 percent from last year. The levy also illustrates the village's ongoing challenge to keep up funding levels for police, fire and village staff pensions, which will continue to put a strain on the village's general operating fund.
Dolasinski said he was proposing to extend the new levy beyond the 3.3 percent mark allowed by tax caps in order to capture any new dollars from new development within the village. He added that Cook County would likely reduce that 7 percent proposal to stay within the tax cap.
Despite the proposed levy increase, Dolasinski projected a 35 percent decrease in the number of tax dollars that will be funneled to fund village operations. The reason? The village's contribution for police pensions will go up by over 50 percent, the contribution for fire pensions will go up 33 percent and the contribution to the Illinois Municipal Retirement Fund (IMFR) is going up 35 percent.
"It's a fact that we should be seeing an increasingly big obligation to fund pension funds," Dolasinski said.
The state government has mandated that pensions be fully funded by 2034. Meanwhile, municipal revenues can't meet the ever-rising costs related to funding those pensions, since returns on investments (a critical source of pension funding) have been low in recent years.
"On the one hand the state says you have to fund your pensions, but the levy is capped at the rate of inflation," Dolasinski said. "At some point this has to come to some resolution. But its only been 10 years since tax caps were instituted, and these realizations have not hit down in Springfield."
To illustrate the problem that pension funding has been for Brookfield in particular, the village roughly doubled its annual contribution for police pensions since 2000. Yet, the village's funding ratio has fallen during that same time, from 81 percent to 64 percent.
Meanwhile, fire pension funding has fallen from 96 percent to 76 percent, despite a 55 percent increase in annual contributions by the village.
"On the police side, they've been using a high rate assumption [on returns from investments] for a number of years," Dolasinski said. "If we don't make that rate, we create a deficit for ourselves. This year we reduced that assumption, so our contribution had to go up."
But since the increased dollars for pensions comes from the village's general operating fund, there's less money in the pool for day-to-day operations, excluding police and fire protection. The village's tax ceiling for its "corporate" levy is $788,000. Because of increases in pension funding, the corporate levy is estimated at $345,000.
"This isn't unexpected," said Village President Michael Garvey. "That's why we're looking in other areas to tighten up. We need to set what our priorities are, and we have to get that much more out of other revenue sources, like sales taxes and user fees and eliminate wasteful spending."
Garvey said the village board will begin its discussions on the 2005-06 budget earlier than usual, and wants a budget passed before the end of the fiscal year on April 30. He added that board members will be more active in the budget planning process in terms of setting priorities
One other wild card in the 2006-07 budget may be a $400,000 grant the village has applied for to develop its new park land at Ehlert Park. Garvey and grant writer Barry Cannizzo appeared in Springfield before the Illinois Department of Natural Resources' Grant Review Board on Oct. 19 to present the village's plan.
They were told that Brookfield had made the first cut and that of the $28 million in grant applications it received, the IDNR would give out some $20 million in grant money. If Brookfield receives the $400,000 grant, it would have to match that amount.
"We can't not take that grant because we have to improve the park to meet the obligation of a previous OSLAD grant," Garvey said. "I'm begging the board for input, and giving them a chance to be involved."