Libertyville’s board of trustees joined several other municipalities this week and voted to move forward with their property tax levy proposal for the upcoming budget year. The levy will increase the average $500,000 home’s tax bill by $18, if approved formally in December.
The decision follows the familiar refrain of heavy revenue hits, budget amendments and financial struggles that many municipalities across the area have been dealing with as a result of the coronavirus pandemic, officials have said.
Libertyville’s property tax levy funds public safety pensions, a quarter of the village’s general fund expenditures, special recreation, and debt, village material states. Nicholas Mostardo, the village’s financial director, said the primary reason for the increase this year is due to public safety pensions.
Specifically, the village has a series of investments for the pensions that report returns at the end of the fiscal year. But at the end of this past fiscal year, which was April 30, they were below the return rate required to keep the pensions on track, village documents state.
Mostardo said this was because of the economic fallout from the coronavirus pandemic at the time. Essentially, the rate of return for the pensions on April 30 was like a snapshot, he said. And with the economy spiraling about six weeks into the pandemic, the snapshot wasn’t a pretty one.
“It was pretty unfortunate timing this year that our fiscal year closed right when we started dealing with COVID,” he said.
Because of this, the village has to make up some of those losses. The total increase necessary for both the fire and police pensions is about $181,000, Mostardo said. The entire levy increase is about $196,000, which was the lone option offered that could cover the pension increase. Without covering that, the village is left to reallocate other money.
At a finance committee meeting on Tuesday, which also served as a committee of the whole meeting, the village trustees decided between three different options for the property tax levy. Those options combined various rates related to an increase in the consumer price index, and the village’s new growth, i.e. the increase in the village’s total assessed tax value.
The first option, which was voted for by the board, combined the increasing CPI with the village’s new growth, which amounts to about an $18 increase on a $500,000 home’s tax bill. The second option combined part of the increasing CPI with the new growth, which would result in a $7 increase, or a total increase of about $110,000 to the levy, Mostardo said. The third option, which just adds the new growth, would have resulted in a $2 decrease to a $500,000 home’s tax bill, but still would have added about $44,000 to the total levy, he said.
On the overall budget, Libertyville has seen a 13% decrease in their total revenue through the month of October when compared to last year. Like other municipalities in the area, Libertyville had to go through essentially a second budget process in the middle of the year to cope with COVID’s economic impact. Despite the property tax increase, Mostardo noted Libertyville as a municipality has one of the lowest tax rates in the area.
“If there was not a pension increase, then I think we would have given a little more serious consideration to the other options,” Mostardo said. “We can’t be taking a haircut on the general levy at this point.”
Village documents state the levy will be voted on at the village’s Dec. 8. board meeting.