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Franks: It's time to move on Valley Hi tax refund

McHenry County Board Chairman Jack Franks introduces US Rep. Sean Casten, right, during a town hall about the government shutdown held at the Algonquin Village Hall on Tuesday, Jan. 22, 2019 in Algonquin.
McHenry County Board Chairman Jack Franks introduces US Rep. Sean Casten, right, during a town hall about the government shutdown held at the Algonquin Village Hall on Tuesday, Jan. 22, 2019 in Algonquin.

The verdict is in – the McHenry County Board can responsibly refund
$15 million of Valley Hi Nursing Home’s $40 million surplus back to taxpayers, and expand rehabilitation services, while simultaneously ensuring its future economic viability.

Valley Hi Administrator Tom Annarella, in a Jan. 25 letter to County Board members, called the proposed rebate “a responsible drawdown” made possible by Valley Hi’s “strong financial health.”

Management Performance Associates, the St. Louis-based healthcare compliance firm that has partnered with us to monitor Valley Hi for at least a decade, concluded the same in both a letter and a March 14 presentation to board members. These conclusions are backed by county administration, whose fiscal discipline has been integral to the County Board’s reduction of property taxes for the past two fiscal years.

The County Board has debated this at length at a February special meeting, and again in March, and will hold another special meeting Tuesday morning. It is my intention to put this to a vote later this month, so notices on how to obtain your refund can go out with your property tax bills, which will be mailed in May.

We must do this. Our numbers are solid, and verified by trustworthy parties. It’s time to act.

Under the plan I proposed to the County Board, every McHenry County homeowner who took the homestead exemption last year, and who paid their property taxes, will receive a refund of about 30 percent of the county government’s share of last year’s tax bill – for example, a homeowner who paid $500 in property taxes to county government would get back about $150.

That would leave Valley Hi with a
$25 million surplus, which amounts to a two-year reserve, plus the funding for necessary capital expenditures. We will simultaneously expand Valley Hi’s level of care and offerings while ensuring the home’s continued financial stability by increasing the number of Medicare and private-pay beds.

The voters generously approved a referendum years ago to fund a nursing home to care for our indigent seniors, and I cannot heap enough praise on the outstanding job Valley Hi’s employees do every day. However, Valley Hi has accumulated a surplus large enough to fund almost four years of operations. It was not the will of the voters for their county government to collect a slush fund that, to put it in perspective, is equivalent to about 60 percent of the entire amount of taxes levied by the entire county government each year.

No other county-owned nursing home in Illinois has a surplus greater than
$5 million. Valley Hi has $40 million, and even after giving back $15 million, we will still have five times more in reserve than any other county-owned facility.

Some argue that local businesses should be eligible for a share of the $15 million refund. However, as I have said before, businesses have benefited from the changes to federal tax law, which conversely harmed homeowners by capping their property tax deduction. Also, many small businesses won’t benefit because they don’t own their buildings. Drive by any strip mall or downtown in McHenry County that’s packed with small businesses – their landlords, who may not even live in Illinois, will get the check. The business owners won’t see any of it.

These issues have to get settled now, because time is no longer our ally. Every day we sit on this surplus exposes the county to expensive litigation.

Illinois courts have held that local governments cannot keep a fund reserve greater than two and a half years’ worth of operations. Last year, the County Board settled a lawsuit filed by several businesses over the surplus in the Valley Hi fund. The $15 million refund will get Valley Hi below that legal threshold, thus preventing further legal action.

The County Board has been discussing the Valley Hi surplus for at least
five years. When I ran for County Board Chairman in 2016, I campaigned on responsibly refunding a portion of it back to taxpayers.

It is time. We can solve this problem on our terms in the form of a refund, or have attorneys solve it for us through litigation, with the surplus going into their pockets rather than yours.

I cannot remember an issue in which County Board members headed to a vote with more information at their fingertips than this one. They have debated this issue thoroughly, and members have at least two more opportunities to do so before an April vote.

You, the overtaxed residents of McHenry County, deserve a refund. It is my hope that your representatives on the County Board agree with me.

• Jack D. Franks, D-Marengo, is Chairman of the McHenry County Board.

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