CRYSTAL LAKE – The McHenry County College Board has a $697,000 question to answer.
After approving a 9.9 percent increase in the tax levy last year, trustees are considering holding taxes at the 2012 level and sacrificing a potential $697,069 in revenue that could be realized by a 4.9 percent levy increase recommended by Bob Tenuta, the college’s chief financial officer.
Large levy requests do not guarantee the full amount is collected but do insure the college would receive all new construction revenue.
Budget projections under both scenarios showed the college would generate $24.3 million in the education fund with a 4.9 percent levy request compared to $23.6 million with no increase. The first scenario would create a fund balance of $14 million in the education account while the second option would leave a $13.4 million balance.
Tenuta advised that if trustees froze the levy and passed on the potential revenue from new construction, the college would not be able to recoup that revenue in the future. Any future levy increase would not build off the base that new construction could have provided.
Trustee Chris Jenner said not only are the new growth projections unrealistic, but he believes the college has over-taxed residents in the past, noting the roughly $30 million collected and stored in the past 6 years.
Jenner said saving and transferring some of that money as the college has done is a way to circumvent taxpayers and fund facilities such as the proposed new health department building with money meant for educational operations.
“A month ago I would have been in favor of a smaller levy increase, but after digging into it and seeing how much they have collected and stockpiled into a fund for building purposes, I can’t support that,” he said. “I support a zero increase in the levy.”
Tenuta also provided financial forecasts assuming trustees maintained a policy of freezing the levy. In that scenario, the total operating fund balance would fall to roughly $2 million by fiscal year 2017 – well below the $15.9 million the college would need to equal the suggested level of three months of operational expenses.
“Overall, the financial forecast trend shows a negative outlook and an erosion of the financial health of the college,” he reported. “The projected net fund balance is significantly below healthy financial margins.”