How is that possible, you ask?
By taking money McHenry County has in the bank and spending it.
That is apparently what McHenry County Board Chairman Jack Franks intends to do next year.
Here is the relevant policy change passed by the Board on June 19, 2018:
From Resolution 6855 passed on June 19, 2018. See page 196..
The property tax levy is almost $72 million this year.
If the same amount were spent every month, the county would have $6 million more with which to spend and/or cut real estate taxes.
If all were given back to property taxpayers, the tax levy could be cut by about 8.3%.
But Franks has announced only a 3.8% tax cut goal.
That would be about a $2.7 million cut from this year’s $71,839,960 tax levy.
That’s only about 45% of the $6 million that the bank balance is being cut.
Correct my math if my chain of logic is incorrect, but that leaves about $3.3 million to be spent elsewhere.
So, that’s how McHenry County government can cut taxes without cutting spending; instead actually increasing spending.
In Springfield, this would be characterized as using smoke and mirrors.
I believe local taxing bodies are spending down reserves to avoid excess accumulation tax objection lawsuits.
Same thing happened in Alg Twh, spending down reserves, and may again this year.
That won’t help the county as far as Valley Hi’s huge surplus goes.
Valley Hi should be blown sky hi.
What a taxpayer boondogle for politicians’ sires and dams.
Will we have to pay for the politicians’ brats’ college educations too?
Wait… so Cal, are you opposed to this?
Would you rather the County keep a large amount of money in its reserves?
The Valley Hi levy will have to be taken again this year or the county will lose the ability to collect it thanks to the tax cap legislation.
This is an unintended consequence of PTELL.
A public body can’t reduce taxes or it loses the ability to go back to the previous tax rate at a later date.
Therefore they keep the tax going and going and going.
The BIG issue, however, is not taxes..
It’s JOBS.
It is being predicted that we will lose ONE THRID OF ALL JOBS by 2030 due to automation.
Then there will be fewer people paying taxes so their taxes will have to go up.
I am in favor of accurate reporting of the budget process.
You will note that this fact has not appeared in an NWH budget story.
If we are going to draw down the balance, all of it should be returned to the taxpayers.
The Board better think hard about a strategy that overtly seeks to create an operating deficit in order to spend down Fund balance.
Assuming a basic scenario where the budget is balanced today with levy revenue of $71.8 million and operating expenses of $71.8 million, those numbers change for next year with a property tax cut of 3.8% taking levy revenues down to $69.1 million and operating expenses growing by CPI of 2.1% to $73.3 million.
This creates an operating deficit of $4.2 million which results in the anticipated reduction in Fund balance in Year 1.
This creates a problem for the following year because you’re now starting out with a levy revenue base of $69.1 million that can only grow by the amount of the PTELL CPI limit and an operating expense base of $73.3 million that will grow by CPI again.
In other words, operating expenses in Year 2 will grow again by CPI (let’s say another 2.1%) to $74.8 million, but the levy, having been reset down to $69.1 mil, can only grow back up to $70.5 million, which results in another deficit in Year 2 of $4.3 million.
Without permanent expense cuts, this strategy locks in a permanent, long-term structural operating deficit.
I’m not sure this is wise.
Coffey, these are taxing bodies without the fiscal integrity of your board, who have for many years taxed in excess of need (and even desire), far beyond the means of their taxed communities.
Those excessive Fund balance accumulations didn’t build themselves up by interest earnings, you know.
If they are limited in the future by PTELL…it’s about time.