Arlington Hts. plans tax increases

The Village of Arlington Heights, facing another year of financial difficulties, is moving toward more tax increases and staff reductions.

Village staff is projecting a $3.6 million deficit out of a $62 million general fund for the budget year starting May 1, 2011, Village Manager Bill Dixon said Tuesday.

Cuts totaling $1.4 million are being proposed with the remaining $2.1 million expected to come from tax increases, said Thomas Kuehne, director of finance.

The village board indicated Monday night it prefers a 5.5 percent increase in the village's property tax levy and raising the utility tax from 3 percent to 4 percent, rather than the 5 percent recommended by staff.

Of the 5.5 percent proposed increase in the levy, 3 percent of that is for increases needed in the police and fire pension funds, said Kuehne.

Kuehne said it would increase the tax bill about $50 for a home valued at $300,000.

The village also plans to freeze pay for nonunion employees, including department heads, said Dixon.

This year department heads received 1 percent pay increases on Nov. 1, and Dixon took a 2 percent increase July 1 the first increases in more than two years.

Nonunion staff salaries increased 2 percent Nov. 1, which represented both a delay and a decrease from the budgeted 3.75 percent. Police and fire salaries went up a negotiated 3.7 percent during the year, although firefighters saved the village about $165,000 by delaying part of their salary hike.

Staff reductions are not expected to be as severe as in the last two years, said Dixon, and at least one of them could be retirements and resignations, not necessarily layoffs.

If the village board approves the tax increases, cuts in public safety departments will not be necessary, according to current income projections.

The board may vote Monday to proceed with these plans, but final action on the property tax levy will be in December.

The village has reduced staff by 38.5 full-time equivalent positions, including 17 layoffs, over two years, and has closed the Teen Center and done away with the Too Good for Drugs program in the police department.

The village has canceled the annual Christkindlmarkt event, saving $78,200; and trimmed $200,000 from the tree-trimming budget.

Insurance premiums were projected at a 12 percent increase but ended up $582,900 lower. Expenditures were reduced by $6.4 million in the two-year period, said a memo to the board.

Sales tax receipts are keeping pace with the amount budgeted for the first six months of the current fiscal year, according to a Kuehne memo to the board.

However, income taxes are expected to be $414,000 under budget, telecommunication taxes $260,000 down, building permits $250,000 under budget and interest income $150,000 under budget.

The village is halfway through the current fiscal year where a projected deficit of $360,000 is now expected to be $1.3 million. This will be paid from village reserves, which will still be more than 25 percent of the budget, said Dixon.

The village's last audit was April 30, and 97 percent of property taxes levied had been received, said Kuehne.

Last year Arlington Heights increased the local portion of the sales tax by one-quarter percentage point, and instituted a 3 percent electricity and natural gas utility tax for the first time.

Trustees spent a little time discussing other ways to increase income, including a real estate transfer tax, which the village does not currently have. This would require a referendum, and $3 for each $1,000 of real estate value would raise $700,000 per year.

Trustees also remarked that 1,200 slot machines installed at Arlington Park would mean another $4 million annually for the village, which would receive 3 percent of the net profits, the staff memo said.

Dixon said the combined village and library tax levy is about 10 percent of the bill for an Arlington Heights homeowner.