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updated: 11/14/2012 2:13 PM

Arlington Heights plans property tax increase

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The Arlington Heights Village Board plans to raise its share of the property tax by 2 percent, which village officials estimate will add $20 to the 2013 bill for a home valued at $300,000.

With a property tax levy of $43.6 million, the municipality's general fund would have an estimated $310,100 surplus after the fiscal year ending April 30, 2014, the board learned Tuesday night.

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However, worst case scenarios could bring a deficit as high as $2 million within two years, according to a report from Tom Kuehne, the village's finance director.

He said after the meeting that rising health costs, concerns about pension liabilities and "most importantly concerns about state finances" contribute to these projections.

With a voice vote, the board approved the increase pending a formal vote Monday, Nov. 19.

Trustee Carol Blackwood questioned Kuehne most strongly about the need for the tax increase.

"People I have spoken to are against any tax increase," she said. "Is it prudent in these times? I don't think so. I would scale it back."

Under village board policy the cash balance in each fund should be at least 25 percent, Kuehne said. The general fund is expected to be at 37 percent with the tax increase, but then fall to as low as 31 percent in a few years. He said reserves should not rise about 40 or 45 percent.

Fund balances contribute to higher ratings for the village and thus lower borrowing costs. Arlington Heights currently is rated AA-plus, with AAA the highest possible.

Trustee Bert Rosenberg noted the high rating has helped the village save millions while refinancing bond issues in the last few years. He also said dealing with emerald ash borer and a possible new police building could mean future bond issues.

Village Manager Bill Dixon pointed out that the village receives only 11 percent of a resident's tax bill, with the remainder going to other public bodies, especially schools. And pensions account for 40 percent of the village's levy.

The fact that the board must set its tax levy about six months before determining its budget has long been frustrating, said Village President Arlene Mulder.

Trustee Norm Breyer said if the board decides at some point that the extra money generated by the property tax is not needed it could lower a different tax, such as that on utilities.

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