Overtaxation at County Nursing Home

I have written before how the McHenry County Board is accumulating tens of millions of dollars more than can be justified.

Today, a friend of McHenry County Blog has prepared a chart that show how the County Board has systematically increased the case on hand since 2006 for no identifiable purpose.

Look at the increase in money being squirreled away at Valley Hi, McHenry County's nursing home.

Look at the increase in money being squirreled away at Valley Hi, McHenry County’s nursing home.

It appears the County Board taxed property another $5 million a year just because state law says the members can get the extra $5 million anyway.  At the end of fiscal 2013–which was November 30, 2013–

the County Board was sitting on more than $35 million, more than they spend in three years

I wonder how much more they squirreled away in the fiscal year that ended Novmembrer 30, 2014.

Below is the income and expenditures for 2013:

Look at the property taxation of $5 million without justification.

Look at the property taxation of $5 million without justification.

So, the nursing home costs $10 million a year and takes in $10 million a year, but taxes an extra $5 million anyway.

This is not conservative budgeting.

In fact, it reminds me of what I saw in 1967 and 1968 during my first years as McHenry County Treasurer.

I went to the fall 1967 Finance Committee meeting at which the budget was being considered.

The budget presented by County Auditor Harley Mackeben, the immediate past Chairman of the McHenry County Board who beat my father in the GOP primary in 1964, showed no beginning balance as of the state of the fiscal year on December 1st.

I suggested that it appeared to me we would have at least $8 million in the bank, but I was ignored.  (Prior to taking office, I had worked at the United States Bureau of the Budget as a Civil Service Budget Examiner.  It is now called the Office of Management and Budget.)

By underestimating the amount of money that would be on hand, the County Board was able to bring in more tax money.

When December 1st came, I found my estimate was wrong.

There wasn’t $8 million in the bank; there was $12 million.

The County Board was squirreling away money to build a new courthouse.

One might have thought (hoped) things might have changed in 55 years, but they apparently have not.

Taxpayers should ask their County Board members how they are planning to spend the extra $30-$40 million.

Sure a couple of million may be needed for cash flow purposes, but the amount accumulated is clearly excessive.


Comments

Overtaxation at County Nursing Home — 15 Comments

  1. What’s wrong with cash reserves?

    What are they doing with the money?

    Are they buying securities?

    Are they buying bonds?

    Who’s to say it’s not going back into the economy, just by the purview of the board?

    If they are investing it, are you opposed to the reserves so long as they are making money?

    What’s not conservative about saving for a rainy day?

    Yours is an argument from fear: ‘Look how much money they are taking in?!

    Where’s it going?!

    When I was there they did the same and didn’t listen to me!’

    Call the WAAAAAAAAAAAAMbulance!

  2. Cash reserves are earning a tiny fraction of one percent interest.

    This money is in a special purpose fund, it cannot go ‘back into the economy’.

    The money that is taken from homeowners in property taxes is money lost to the economy; rising property taxes in McHenry County force all but the wealthiest homeowners to cut back discretionary purchases like eating out, or savings into college funds, or paying for repairs on their homes.

  3. So the money is in a magic bank account where institutions won’t lend it out and effectively put it back into the economy?

    But I agree we have high property taxes, yet there is logic behind having money set aside for a rainy day.

    What would be the appropriate level allotted to the fund?

    10 million?

    If China’s housing bubble bursts or there is another recession, you would risk putting old people literally in the dark and allow Valley High to not pay its bills?

    That’s not consevative.

    Conservative values dictate living within your means.

    That starts with savings and planning for a rainy day so if there is a moment a recession hits or there is an economic downturn, you don’t get caught with your pants down.

    Would you say that Apple, a company that less than two years ago had more cash

  4. So the money set aside is in a magic bank account where institutions won’t lend it out and effectively put it back into the economy?

    I agree we have high property taxes, yet there is logic behind having money set aside for a rainy day.

    What would be the appropriate level allotted to the fund?

    10 million?

    If China’s housing bubble bursts or there is another recession, you would risk putting old people literally in the dark and allow Valley High to not pay its bills if after a year local government couldn’t afford keeping the lights on?

    That’s not consevative.

    Conservative values dictate living within your means.

    That starts with savings and planning for a rainy day so if there is a moment where a recession hits or there is an economic downturn, you don’t get caught with your pants down.

  5. If you read the budget you will see the yields on surplus funds. T

    he numbers are there for you to see.

    If the fund kept a year’s budget in reserve, $10 million, an extra $25 million is left over.

    And every year the fund collects more taxes, and the surplus grows.

    The nursing home is well run, and living within its means, but additional funds are being collected for new building.

    The building is quite new, and there has been no history of additional capacity need.

    There are ample beds in the County.

    This money is not being saved for rainy days, I believe it is over taxation to squirrel away funds for a building project which can go ahead without taxpayer input in the form of referendum such as was required to build the new building in 2007.

  6. It’s past time for all who you characterize as a “friend of McHenry County Blog” to be anonymous in the information they provide.

    Why should readers take it as credible if the author does not own it by putting their real name on it?

  7. Readers should do their own research.

    Readers should not believe facts, or lies, are contingent upon the likeability of person stating the facts or lies.

  8. Frank, by your logic, the nursing home should levy $50 million a year in additional property taxes and build up a half a billion dollar reserve.

    After all, what’s the problem with that?

    The money will be invested and used!

    I’ll tell you what the problem is: it’s not THEIR money, it’s the TAXPAYERS’ money!

    Government’s should take ONLY as much as they legitimately need to cover necessary expenditures and no more.

    Leave the rest in the taxpayers’ pockets and let them, individually and collectively, decide what to do with THEIR money.

    Is it legitimate to keep a reasonable reserve?

    Absolutley!

    The key word here is “reasonable”.

    You might be interested to know that Moody’s Investors Service, which rates quite literally hundreds of billions of dollars of municipal bonds, considers a reserve equal to 8% of expenditures to be reasonable: basically, one month’s expenditures.

    It might be logical for governments that receive the bulk of their money in a couple of large chunks (i.e., property taxes) to keep a larger reserve, but there is no legitimate reason to keep anything over 20% of expenditures.

    In the case of the nursing home, they are keeping THREE HUNDRED FIFTY PERCENT of annual expenditures as reserves.

    It is outrageous.

    And it’s outrageous that they have flown under the County’s radar for several years.

  9. Readers shouldn’t trust Susan because she doesn’t possess an elementary understanding of banking.

  10. I want to learn, please teach me.

    The budget posted in this article stated investment income of $64389 on a surplus fund of (I presume)at least $30,000,000 over and above property value.

    The investment income return generated on $30,000,000 appears to be .0021 (two tenths of one percent).

  11. Is this where Koehler was planning to get the money from to build a homeless shelter in Hartland? In this day of socialized medical care, why is a government unit in the nursing home business?

  12. Frank, that’s a cheap shot at Susan.

    So far from you we’ve seen accusations without evidence and personal attacks.

    Nothing positive.

    No explanations of why big reserves are good.

    Just attacks on people saying it’s unwarranted.

    Why don’t you explain what’s wrong with my reasoning?

  13. I was the only candidate who ran for McHenry County Board who raised the issue of the many of Million Dollars of reserves and questioned whether running a Nursing Home is the proper function of County Government.

    Not only are residents being overtaxed but the County is losing Millions of Dollars in tax revenues if this facility were placed in private hands.

    This facility is 70% occupied and competes with 2 private facilities that are not at peak capacity.

    The fundamental question we must ask our selves is what is the proper function of County Government?

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