Published Dec. 1, 2016
Boards have different concerns at levy time
By Ken Knutson
While some are counting the number of shopping days left until Christmas, village and school officials are facing a different kind of countdown.
They must file their tax levy — or annual request for property tax revenue — by Tuesday, Dec. 27.
Proceeds from the 2016 levy will fund operations in the 2017-18 fiscal year.
Without a firm grasp of exactly what those expenses might be, setting the appropriate levy amount can be a challenge.
That’s the discussion taking place in Community Consolidated Elementary District 181.
At their Nov. 14 meeting, board members expressed surprise at the $1.2 million surplus for the 2015-16 fiscal year identified in the budget report.
It seemed too much of a good thing for some, including board President Mridu Garg.
“In my three years I haven’t seen such a big surplus,” she said. “It concerns me that we weren’t aware of it earlier on, and it makes me wonder if we’re going to have the same occurrence this year.”
As the board prepares to approve a $58.1 million 2016 property tax levy at its Dec. 12 meeting, board member Jennifer Burns suggested that learning of the excess so late in year complicates the analysis of the amount of revenue the district should be targeting.
“$1.2 million is a lot of money that could fund initiatives included in the strategic plan, including something like technology,” she said. “It makes it hard to be confident in the numbers and to be able to make an educated decision, an informed decision about how much to levy.”
The tentative levy proposed represents a nearly 2 percent over last year’s extension, the $57 million the district actually received.
In the last couple of years, the board has endeavored to sequence financial considerations by understanding anticipated expenditures before calculating the revenue needed.
“We need to decide what the budget is, and that decides the levy,” board member Rich Giltner said.
Board member Jill Vorobiev agreed, but noted that has not been past practice, and the paradigm shift will necessitate greater scrutiny of the budget from year to year.
“Historically we’ve just looked at levy options and we have allowed the levy amount to drive the budget,” she said. “To the extent we’re saying, ‘Yes, we’d like to levy less,’ obviously we want a lower budget.”
The property tax cap limits the increase in the levy to 5 percent or the previous year’s consumer price index, whichever is lower, plus an amount for new growth.
The CPI in effect for the 2016 levy is .7, and District 181 has estimated new construction at $30 million.
Surma reported that actual growth could be significantly more.
“New construction is coming in at $37.3 million,” Surma said for the two DuPage townships within in the district.
He estimated growth for the district’s portion of Cook County at $800,000 based on last year’s figure.
“Which gives us new construction coming in this year at $38.1 million and some change,” he said, adding that last year’s figure was $31.2 million. “Every $10 million in new construction translates into about $243,000 in revenue.”
Surma attributed last year’s budget surplus to residential property taxes paid late, an unexpected state payment and corporate personal property tax revenue that is hard to forecast.
“There’s times where I don’t know ahead of time how much we’re going to get from the adjustments and all that,” he said.
Superintendent Don White said any surplus goes into fund balances rather than being earmarked for expenses. While revenue in one category may outpace expectations, another area may drop off.
“Until we’re sure on the other revenue sources, we don’t want to go about making choices that we’re unhappy with,” he said.
The levy conversation has had a different tone in Hinsdale High School District 86.
The levy provides an annual opportunity for board member Ed Corcoran to reiterate his concern over property tax increases.
“I believe this levy process ... is marking the unsustainable tax increases that are almost double CPI,” he said.
The increase in the tentative levy at this point is listed at 1.9 percent.
Chief Financial Officer Bill Eagan has supported the board filing a tax levy at the maximum amount allowed under the cap given the unknowns at this time of year.
“The levy amount is a strategic decision for the board,” he wrote in his presentation. “The maximum levy gives the board the most flexibility to deal with unknowns like required FTE (full-time equivalents) that can change mid year. ‘Tax and abate’ allows the board to make a final decision four months from now when more information is available.”
Superintendent Bruce Law reminded board members that this levy will fund operations for fiscal year 2018.
“The board hasn’t even considered that budget yet,” he said. “We don’t even have a budget yet for 2018.”
The District 86 board is expected to vote on its levy Dec. 19.
The estimated levy increase for the village of Hinsdale is 1.9 percent, slightly less than the levy increases since 2012.
“CPI is going to be the biggest drive,” said Darrell Langlois, assistant village manager and finance director for the village.
The village’s levy increase have been slightly larger than the CPI every year for the past four years. Past CPIs of 3, 1.7, 1.5 and .8 percent correspond to levy increases of 3.5, 2.1, 2.7 and 2.1 percent.
The village does not rely as heavily on property tax revenues as the school districts do.
“We have a lot more diversified revenue stream,” Langlois said. “Property taxes are a significant component, but we have a lot of other revenue sources.”
The village has projected capital expenses for the next five years and infrastructure improvements to 2023. If there is surplus revenue in any given year, there is little discussion about how to use it.
“For the last five or six years, most of any surplus funds above a 25 percent reserve have gone to funding infrastructure improvements or extra (police and fire) pension payments,” he said.
The levy will be on the agenda for a second read at the Dec. 13 Hinsdale Village Board meeting.
— Pamela Lannom contributed to this story.