East Dundee places cap on debt, property tax hikes

With home-rule privileges on the line in the March 20 primary, East Dundee trustees are taking steps to assure residents they won't abuse their power.

The village board this week unanimously approved placing a cap on future property tax increases and limiting the revenues used to pay off certain levels of debt issued by the village. The ordinance is being implemented the month before voters will decide whether East Dundee should cease to be a home-rule community.

"It's for the residents to have confidence that if home rule is retained, the village will continue to be diligent with their use of home-rule powers," Village Administrator Jennifer Johnsen said. "Since we're all talking about it at this time, we recognize there's another area where we can restrict ourselves even further."

Under the ordinance, village officials are pledging to not raise property taxes above a state-imposed cap - the lesser of 5 percent or the rate of inflation - placed on non-home-rule communities. Trustees passed a similar measure when the village's home-rule status was approved in 2004, but it was never officially written into code, Johnsen said.

In the case of a property tax freeze, the ordinance also allows the village to later play catch-up. she said. Trustees in December approved a 13 percent levy hike to recapture what would have been collected if the village had raised the levy by the Consumer Price Index instead of keeping it flat for several years.

Additionally, non-home-rule communities are prohibited from issuing debt beyond 8.6 percent of their total equalized assessed value, per state law. As long as the village remains a home-rule authority, East Dundee's ordinance promises to use revenue sources other than property taxes to pay off any debt above that level.

Under its past administration, the village took out debt exceeding the non-home-rule limit for major infrastructure and economic development projects, Johnsen said. Home-rule revenues and other special funding mechanisms are used to fund the annual bond payments.

"We wanted to give the community some assurance ... that the board felt strongly about not issuing debt that was paid for by property taxes," Johnsen said. "The village would not have taken that on had they not had other revenue sources to pay for it."

The binding referendum question seeking to remove East Dundee's home-rule powers was placed on the March ballot by state Rep Allen Skillicorn, a former trustee. If approved, the measure would eliminate revenue sources that generate $1.65 million annually and make up about 40 percent of the village's operating budget, Johnsen said.

East Dundee is holding informational forums and sending out a newsletter explaining its financial situation and home-rule authority. The first public presentation is at 11 a.m. Feb. 23 at the Village Green condominiums.