The state’s financial woes and Tazewell County’s frugal approach to property taxes have produced “a perfect storm” that will confront the County Board on Wednesday night.
The board will decide whether to seek voters’ permission in a March referendum to raise the county’s property tax rate by 15 cents, or about 30 percent, through at least 2021.
Without such an increase, the county will find itself “in a structural deficit, where expenses exceed revenues,” board Chairman David Zimmerman said Tuesday.
For 15 years the board chose not to raise the county’s tax rate within the level allowed by tax caps produced by the Property Tax Extension Limitation Law (PTELL) that voters approved by referendum two decades ago.
Zimmerman said the proposed increase from 49 cents to 64 cents would raise Tazewell’s tax rate from the second to the fifth lowest in the state.
“It might have been better,” he said, if the board had used its power under PTELL to raise the rate over the years within 5 percent or the rate of inflation, whichever is less. Inflation over the past decade has averaged about 2 percent.
That’s hindsight in the wake of Illinois’ ongoing financial troubles that it seeks in its new budget to offset in part by reducing funds shared with local governments. The state’s declining population, producing lower income tax revenue, and flat sales tax revenues also combine for “kind of a perfect storm” of financial pressure on counties, Zimmerman said.
Tazewell will lose $1.2 million, or about 5 percent, in general revenue funds as a result in the next fiscal year, which begins in December.
The board will use its savings reserves to address some of that loss in the budget it’s expected to approve Wednesday. It also likely will continue a general county employee hiring freeze that it imposed this year.
To balance future budgets without depleting savings or borrowing, however, the board’s Finance Budget Committee this fall decided to put the option of a PTELL-exceeding tax increase rate hike to voters. They must approve it in Tazewell, the only central Illinois county except Logan that operates under PTELL restrictions.
The 64-cent rate would require the owner of a home with a $100,000 fair market value, excluding exemptions, to pay $50 more in 2018 taxes, about a 24-percent increase. The home’s tax bill would rise to $53 by 2021, assuming a 2-percent annual inflationary increase in the property’s value.
The higher tax rate would produce about $4.3 million in additional county property tax revenue, or $17.36 million in total, when it’s first collected in 2019.
Voters can expect to see those estimates listed on the referendum if the board approves adding it to the March primary election ballot.
Follow Michael Smothers at Twitter.com/msmotherspekin