Board to Discuss a 0% Tax Levy Increase

0% Tax Levy Increase Achieved by Hiring Delays and Taking Money from Reserves

money, budget, dollars, taxes, 0% tax levy increase
Credit: Pexels via MGN

Park Forest, IL-(ENEWSPF)- The Village Board will hold its Monday meeting via conference call where members are set to discuss a 0% tax levy increase for the upcoming fiscal year 2022/2023 budget. While there are increases in spending, Finance Director Mark Pries managed to present the board with a proposed tax levy that will require no additional dollars. That does not mean, of course, that residents can expect to see their personal property taxes remain flat as these taxes are a combination of school and other taxing bodies.

On the village end this sounds like good news, but it comes with strong cautions. Less money levied means fewer capital improvements, less staff to carry the same or greater workload, and reserves that will not replenish unless money is budgeted for that purpose — or levied for that purpose — in future years. If residents were hoping for additional police, firefighters, or paramedics, that cannot happen with a 0% tax levy increase. Residents hoping for side streets to be ground and rebuilt, a long-overdue need, will likewise be disappointed.

Monday’s meeting will begin with a public hearing regarding the tax levy. According to the agenda, all public comments can be sent prior to the phone conference Board Meeting, via email to [email protected], by 3 pm the day of the meeting, Monday. Public comments received via email will be read during the public meeting. As a rules meeting, the board is not expected to take any action.

The final levy will be adopted next week, December 13.

“Historically, Park Forest has conducted a public hearing even in years when the levy increase has been below the 5% mandate and the 2021 levy is below a 5% increase,” director Pries told the board in his November 30 memo on the levy.

The property tax levy for general corporate purposes funds the general operations of the Village – Police, Fire, Administration, Public Works, Recreation, Parks & Community Health, Community Development, and Economic Development – which are not funded by other sources, according to the Pries memo. This part of the levy will require $685,000 more than last year.

Bonds and interest will require $250,000 additional dollars. The actual debt service for this part of the budget is $1,306,850, but that will be abated by $40,650 from the General Fund and $1,056,850 from the Water Fund. So, while your taxes will not pay that $1 million-plus from bonds and interest, your water bills will.

IMRF and FICA require only $4,983 in new dollars, according to Director Pries’ memo. “Both IMRF and FICA fund balances were favorably impacted by hiring delays and maintain positive balances,” Pries said.

The actual total increase needed in the 2021 levy is 4.12% or $769,986. However, Pries and staff note there are factors that will help to offset this increase. These include the following (the following section is directly from the Pries memo):

Health Insurance Levy

The 2020 tax levy had an increase factor of 7% as the actual increase to health insurance costs is not known until 6 months after the adoption of the levy. Thankfully, the trend of low renewal premiums for the Village’s health insurance continued in 2021 with an overall increase of 1.85%. This means the 2020 tax levy had an additional $98,000 in it to cover health insurance costs that were not needed. This reduces the amount needed from the 2021 levy for health insurances from $148,000 to $50,000. Removing this $98,000 from the total needed from the levy lowers the amount of the levy increase $769,986 to $671,986.

Other Expenditures

The 2020 tax levy had $150,000 in it to cover the 2% Other Expenditures in the General Fund but this increase was removed from the FY 21-22 budget guidelines and not placed into the budget. Also, since the dollar amount needed from the 2021 tax levy for Other Expenditures decreased by $5,000, this means the $150,000 from the 2020 levy plus the reduction of $5,000 for the 2021 tax levy – a total of $155,000 – can be removed from the levy increase amount.  This moves the levy increase from $671,986 to $516,986 and lowers the increase from 4.12% to 2.76%.

Police and Fire Pension Funds

Based on the actuarial studies for the pension funds, the Police Pension Fund needs an amount of $27,894 added to the levy and Fire Pension needs an amount of $47,429 added to the levy, for a combined total of $75,323. Each year, the Village transfers money from the IRMA interest allocation received in January to the Police and Fire Pension Funds. The amount of this interest allocation is not known until late in each calendar year. Staff is proposing to retain $75,323 of the IRMA interest allocation in the General Fund for FY 21-22 to cover the increase needed for the pension funds.

This reduces the total levy increase from $516,986 to $441,661. $441,661 would be an overall 2.36% increase to the levy.

It is important for the Village to show it is levying the full actuarially recommended contribution (ARC) amount for the pension funds; therefore, the levy amounts for the Police and Fire Pension Funds will remain as initially presented. The general corporate portion of the levy will be reduced by the $75,323 in order for the overall tax levy to be reduced.

So, why not a 2.36% tax levy increase? That dollar amount, just shy of half a million dollars, will be paid by monies already on-hand in the reserve funds.

[This] takes what was initially a levy increase of 4.12%, or $769,986, and reduces it to a $0 and 0% increase to the 2021 tax levy. This would be the second time in the last four years the Village passed a 0% increase in its tax levy. [emphasis in original] The General Fund’s results for the fiscal year ending June 30, 2021 were the source of funds that provided such extensive adjustments to the initial proposed levy amount. Using reserves must be very carefully considered because these funds do not refresh themselves every year like ongoing revenues (i.e. property taxes, income taxes, sales taxes, etc.) do. Once the Village uses reserve funds, they are gone and cannot be relied upon to be there year-after-year to support ongoing, fixed costs. The fact that the results for FY 2021 were derived from measures put in place due to the COVID pandemic indicates that reliance on the use of General Fund reserves has to be carefully scrutinized as the Village’s finances may very well change once the pandemic is over.

A zero percent increase in the tax levy means there will be fewer capital improvements, but operations will be fully funded. Park Forest will not have to borrow to work.

The caveat at the end of Director Pries’ memo is worth repeating:

Using reserves must be very carefully considered because these funds do not refresh themselves every year like ongoing revenues (i.e. property taxes, income taxes, sales taxes, etc.) do. Once the Village uses reserve funds, they are gone and cannot be relied upon to be there year-after-year to support ongoing, fixed costs. The fact that the results for FY 2021 were derived from measures put in place due to the COVID pandemic indicates that reliance on the use of General Fund reserves has to be carefully scrutinized as the Village’s finances may very well change once the pandemic is over.

The Village of Park Forest has maintained a 2-3 month operating reserve to pay bills when there are delays in monies received from the state of Illinois and other sources. This budget is balanced at a 0% tax levy increase by dipping into reserves significantly. Once the reserves are exhausted, they’re gone.

The can has been kicked.

The full agenda for Monday’s meeting is available here.