Schaumburg giving in to a property tax

One of the largest holdouts against a municipal property tax in the Chicago area is caving to new financial pressures.

Schaumburg trustees Tuesday recommended imposing the village's first property tax.

Officials say they need a new funding source to make up for a $17.6 million deficit from dwindling sales tax revenues.

The proposed property tax would generate $23.7 million next year, coming in at 25 percent of general fund revenues.

According to village calculations, that would mean the owner of a home worth $250,000 would pay about $252 to the village, or roughly 8 percent of the property taxes paid to all taxing bodies including the county, library, park and school districts.

However, the village also plans to absorb the cost of garbage pickup and eliminate its $20 vehicle stickers.

Village Manager Ken Fritz said the elimination of these fees should make the new property tax a wash for the owner of a $250,000 home who owns two cars. Garbage pickup currently costs such a homeowner $170 per year.

Village officials say their choice was between raising a property tax or severely cutting core services.

Without the tax, they say, they'd have to cut many capital improvement projects, almost all public transportation funding and 123 employees, or 24 percent of staff.

But many residents who attended Tuesday's meeting expressed skepticism that the village was being as hard-nosed about spending cuts as many businesses now are.

"You say you can't cut - you have to cut!" resident Gary Moreno urged. "We're at the end of our rope with taxes."

Officials said sales tax receipts alone - which along with the food and beverage and telecommunications taxes make up nearly three-quarters of village revenues - have fallen by $7 million in the past five years.

The village's general fund cash reserves have dropped to about $9 million today from $25 million in 2006. Officials say at that rate, the village will run out of cash sometime in 2010 or 2011.

Fritz said the village will also eliminate 25 vacant jobs. That would bring to 98 the number of full-time jobs eliminated by attrition since 2003, as well as 38 part-time jobs.

However, no current staff members will be laid off.

Only Trustee Jack Sullivan voted against the property tax recommendation, but he declined to comment afterward.

Trustees will likely vote to create a preliminary tax levy next Tuesday, Nov. 24. This would pave the way for a public hearing Dec. 15 and a final approval vote on Dec. 22.

Mayor Al Larson said he regrets a property tax has finally become necessary for the 53-year-old village, particularly as he vetoed a proposal for a property tax back in 1989. But he said he believes Schaumburg will still stand out as the best place to run a business or own commercial property in the region.

The property tax will be the area's second lowest to Elk Grove Village's. But with an even stronger investment in infrastructure, Schaumburg will remain the best place to locate a store, restaurant or office building, Larson said.

Schaumburg is among only a handful of Chicago suburbs without property taxes, including Gurnee, Oak Brook, Prospect Heights, Deer Park, Carol Stream, Vernon Hills and Campton Hills.

Forty-year residents Bob and Diane Raniere were waiting at the Schaumburg Township assessor's office Tuesday afternoon, seeking an explanation for why their homeowner's exemption had been cut by more than $500.

Though shocked to hear of the change to Schaumburg's long-held policy, they didn't believe the root of the problem was village overspending.

"We've been behind most of the things they've done," meaning the convention center, Alexian Field and purchase of the Schaumburg Regional Airport, Diane Raniere said.

"I think Al Larson has done a good job," Bob Raniere added. "This is just about addressing a particular period in our history."

Tax: Public hearing coming Dec. 15