McHenry County Property Taxes: Taxing entities save up for big purchases, uncertainties

Note to readers: This is one-half of part four of our series, Property Taxes: Follow the Money. Read the intro to part four and the other half on other taxing entities’ cash in the bank. For Illinoisans, property taxes are a sore spot. Illinois has the second highest property taxes in the nation, and McHenry County is in the top 10 for highest property taxes in the state. Illinois also ranks first in the country with nearly 7,000 taxing districts, which makes examining one’s tax bill a confusing exercise. While taxpayers are annoyed by the price tag, property taxes are also a primary source of revenue for local taxing bodies. This series examines some of the issues in Illinois for residents and taxing bodies.

Each year, the Algonquin Area Public Library sets aside money to go toward improvements.

The goal was to have enough money to cover a list drawn up several years back identifying capital improvements and maintenance items, Executive Director Stephen Bero said.

With the savings from a round of retirements last year and two previous projects coming in under budget, the board has more than it planned. Instead of moving forward with some identified improvements, the board is taking a step back and looking at the big picture, he said.

Patrons have voiced a need for more meeting and study rooms, and staff has proposed adding a maker space filled with 3-D printers and professional-grade audio and visual technology, Bero said. Teenagers have only a small corner at the main library but could use a separate space with the latest technology and privacy so they can make some noise.

“It’s really about creating space so people can come and collaborate,” Bero said. “These things are very popular at other libraries, and we’ve gotten some demands from our patrons. We’ve had to turn people away from our spaces because we don’t have enough of them.”

The Algonquin Area Public Library is one of 31 taxing entities in McHenry County – there are 117 total – to have enough money in their general fund to cover a year’s worth of normal expenses at the end of their 2013-14 budget year, a Northwest Herald analysis found. Another 40 have more than double the 90-day benchmark often pointed to by finance directors and state agencies such as the Illinois State Board of Education.

INFOGRAPHIC: McHenry County taxing entities’ cash on hand at end of 2013-14 fiscal year

That threshold has its critics – one fire chief said fire protection districts are advised to have 180 days to a year’s worth of cash on hand – but a handful of lawsuits in McHenry County have argued the property tax levies passed by certain taxing bodies are illegal because of how much money is in the bank.

“Ninety days is antiquated for fire districts,” Cary Fire Protection District Chief Jeffrey Macko said. “With the way the state’s going, we don’t know what’s going to happen. ... You need to have money in reserve because what if an unforeseen disaster strikes in Cary? We’re going to have to pay for that until or if FEMA [Federal Emergency Management Agency] reimburses us. The people of our community are going to expect us to respond.”

The Illinois Association of Fire Protection Districts administrator did not know of a guideline for fire protection districts, but five of the 14 taxing entities that had more than one year’s worth of cash on hand at the end of budget year 2013-14 were fire protection districts.

And like most taxing entities, the Cary Fire Protection District will need to make some big-ticket purchases, including a replacement fire engine and ladder truck, in the future, which is why Macko expects his Board of Trustees to take everything they’re allowed under the state tax cap.

That’s what they did last year and the year before that – as did half of the taxing bodies with more than a year’s worth of cash on hand, the Northwest Herald found.

The cap limits how much taxing bodies can increase the amount they collect in property taxes, tying it to the rate of inflation plus any new growth like a new deck on a house or a whole new housing development. The deadline to pass their annual levies is approaching later this month.

The number isn’t the only one people should be looking at when evaluating whether tax increases passed by local governments are appropriate, said Ted Dabrowski, the vice president of policy for the fiscally conservative think tank Illinois Policy Institute. He also pointed to the rate salaries and benefits grow, which could keep cash on hand low.

Discussions happening in Springfield – such as a proposed two-year property tax freeze – also are something entities need to take into consideration when deciding what to do about their levies this year, Algonquin Area Public Library’s Bero said.

The library board ultimately approved a levy that captures new growth and the inflation, library spokeswoman Diane Strzelecki said.

But most taxing bodies pointed to their capital plans for why they’re saving.

The village of Johnsburg had a little more than $900,000 of the $1.3 million it had in its general fund earmarked for its very detailed capital plan, which plans out the replacement and maintenance of vehicles, computers, phone systems, tractors, roofs and sidings on its buildings, parking lots and park amenities, according to village documents.

“We’re sensitive to the idea that residents question [the amount of money in the bank],” Village Administrator Claudett Peters said. “We’re not trying to accomplish everything in one fell swoop, in one year.”

Having money set aside also means the village has money to pursue grants that require matching funds as many state and federal grants do, Peters said, adding that the board also has been targeting its levy increase at the police pension shortfall.

Burton Township has been saving up to put an addition on its town hall building in Spring Grove or build new, Supervisor Sam Jones said. The existing facility doesn’t have bathrooms and isn’t accessible to people with disabilities, which means everyone has to work from home.

The township is always looking for ways to save money, he said.

The decision to build a new building or to take on a large project should be more transparent, Prairie Grove Village President Stan Duda said, adding that if his board decided to pursue a big project, it would take it to the voters in a referendum or through a single-item board vote.

His board plans on reducing or keeping level its levy this year, a policy that has lowered the levy 9 percent to $365,000 last year from a high of about $400,000 in 2009, according to county records.

“What happens is many governments start taxing more and more and that allows them to do big projects that the taxpayer doesn’t know they are funding,” Dabrowski said. “If you want to do a big project, go out and fundraise for it and let the taxpayer decide. I think people are already stretched as it is.”

With 117 taxing entities in one county, there are a lot of explanations for why they’re doing what they’re doing, said Carol Portman, the president of the watchdog group Taxpayers’ Federation of Illinois. Some might make sense, and others might not.

“Some people like to save up and then buy their big expenditures, and others are comfortable borrowing and buying,” she said. “You can make arguments that make sense. I’m not sure there is one right answer. I think there’s lots of way to make sense.”

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