Geneva City Staff Recommends Maximum Tax Levy Increase
City staff says it's prudent to OK a 3.43 percent increase in the estimated non-debt-related portion of the tax levy, for two reasons: (a) the final levy cannot exceed the estimation and (b) it allows the city to "capture" new growth.
City of Geneva staffers are asking the City Council to recommend an estimated tax levy in the amount of $6,526,710. That's an increase of about 3.91 percent over the previous tax levy.
But staffers underline that it's only prudent to do so.
The primary reason is that the final levy cannot exceed the estimated tax levy, so it's to the city's advantage—in terms of total dollars the city receives to run its operations—to estimate on the high side.
The danger of estimating low is that the Kane County extension can—and likely will—lower the final levy, in which case the city might have to make major budget cuts to operate. It's also a scary time for municipalities as the state of Illinois continues to hold off payments and examines ways to shift tax and pension funding burdens to local units of government.
Based on tax-cap legislation, the city can increase the levy by 5 percent or the rate of the Consumer Price Index, whichever is less, plus the estimated value of new growth.
So, for Geneva, the estimated 2012 levy was calculated using the 3 percent CPI plus estimated value of new growth, at .43 percent.
(See the "Truth in Taxation" PDF screen shot atttached to this article.)
"In order to ensure that the city captures this new growth, it is recommended that the city pass a levy which is higher than what is expected to be extended by the county," Finance Manage Tom Dahl explained in a memo to the City Council.
The city's portion of the 2012 estimated levy is $4,757,979—up from the 2011 levy of $4,597,082. That's basically the amount the city can spend per year on city services and retirement funds.
The balance of the estimated $6.5 million levy is mostly made up of dollars the city owes for debt retirement, primarly from general obligation bonds used to fund capital projects, such as improvements to the city's water treatment plant.
The 2012 property tax levy estimate includes a 5.02 percent increase in the debt service levy, and there isn't much the city can do change that number in the estimated levy. The increase is due to variances in the annual debt service payments, Dahl's memo says.
The total debt service amount will increase by $84,621 bringing the total debt obligation funded by the levy to $1,768,731.
Last year, the City Council voted 7-2 in the Committtee of the Whole meeting to recommend a General 2011 levy total of $4,597,063—essentially holding the line on the number of dollars the city would levy year over year.
Holding the line on this year's levy is likely to be more of a challenge, for a couple reasons. One is that the city's tax base continues to shrink. Yes, the good news is that the city had more than $4 million in new construction since last year's levy.
The bad news is that the total Equalized Assessed Value of property in Geneva went down about 2.9 percent, based on the Geneva Township assessor's latest estimate. When the tax base shrinks and the levy stays flat, tax rates necessarily go up.
Holding line also might be a challenge simply because the CPI is 3 percent this year. It was only 1.5 percent for the 2011 levy. Politically, there's more to gain and lose in a city budget that always is struggling to provide the best possible services.
The city is looking at ways to provide services more efficiently. Also on the agenda for Monday's City Council Committee of the Whole meeting is a draft resolution to hire Voorhees Associates to conduct a staffing analysis.
The purpose is "tohelp determine the appropriate level of staff for the organization to meet its core service and operational requirements and help develop deployment strategies that utilize staff resources in the most effective manner."