The art of compromise was alive and well Tuesday night as three alderman on the Finance Committee agreed to ask for a 1 percent reduction in the 2012 city levy. The reduction will replace the 4 percent increase the City Council penciled in on a resolution sent to the county earlier this month.
Illinois law forces the city to submit an estimated levy, or annual request for property taxes, to the county before all the numbers are crunched. In tackling the task of coming up with a real number, Finance Committee Chairman and 4th Ward Alderman Stephen Hipskind had to find a happy medium between the cases argued by two other aldermen.
Fourth Ward Alderman Kevin York made a pitch for a 2.5 to 3 percent reduction to shift some of the funding burden off taxpayers' shoulders. York said he was also pleased with the moves the city had made in recent years to build up a fund balance, which acts as a rainy-day fund for the city.
A sunnier sales tax outlook and the receipt of some state grants means that, barring unforeseen emergencies, the city should end its fiscal year with $1.4 million left over. York said even with a levy reduction, the city could put most of that surplus toward the fund balance, creating a cushion of almost $11 million.
According to municipal budgeting standards, a city the size of Elmhurst should have a $9 to $12 million fund balance.
Fifth Ward Alderman Scott Levin, however, wanted to err on the side of caution with a zero percent levy increase. While acknowledging the city seemed to be on a rosier financial path, he was not yet convinced that cutting the levy was appropriate.
“I am nervous about going lower than zero percent right now,” he said. If sales tax revenue continued its upward trend, the city could always abate, or refund, taxes, he said.
“You can't levy later,” he said. “You can abate later.”
City staff originally requested a 3 percent increase. Finance Director Marilyn Gaston said sales taxes did show consistent improvement each month compared to the last few years but, she reminded aldermen, the last few years were abysmal.
“We would be uncomfortable with a decrease. Could we live with it? We could live with whatever the council tells us to live with,” she said.
Currently, the city is running about $100,000 over projection on expenses, a small amount in a $52 million annual budget. Much of this overrun was due to the July 1 storm that ripped up trees and flooded roads.
Gaston and Assistant City Manager Mike Kopp estimated that cleaning up after big weather events costs the city $200,000 on average.
First Ward Alderman Diane Gutenkauf asked how the committee is factoring Elmhurst Memorial Hospital's request for nonprofit status into the levy discussion. With its expansion, the hospital had to apply to regain its tax-exempt status. While this is being deliberated, all taxing bodies in York Township are being told to levy as if the hospital is being taxed.
Gaston reported the state has yet to finalize EMHC's request for nonprofit status. It is likely the hospital will ultimately regain its tax exemption, she said, and the city should continue to plan to repay EMHC.
York and Levin finally agreed on the 1 percent reduction, which equals about $90,000. Seventh Ward Alderman and committee member Mark Mulliner was not present Tuesday.
The full council will now discuss the committee's recommendation.