Schaumburg homeowners may start paying property taxes to village

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

Schaumburg trustees began discussions Tuesday of imposing a property tax for the first time in village history.

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

The village is among only a few Chicago-area communities that do not levy a real estates tax on local property owners.

Most - including Schaumburg, Gurnee, Deer Park and Oak Brook - have large shopping malls and retail bases that have generated enough sales taxes to fund most municipal services like police and fire protection, roadwork and snow plowing.

Others non-property-tax towns include Carol Stream, Prospect Heights, Campton Hills and several smaller communities in Kane County including Kaneville, Big Rock and Lily Lake.

Schaumburg's financial woes suggest they won't be the last to weigh the potential of considerable political fallout against the prospect of massive service and job cuts.

Carol Stream has also recently considered imposing a new property tax, and Prospect Heights has made deep cuts at city hall and closed its police station to the public in the face of dwindling revenues.

Schaumburg officials say their options are similarly dire: raise a property tax or make severe cuts in services, including widespread municipal layoffs.

That would include the elimination of many capital improvements, almost all public transportation funding and 123 employees, or 24 percent of the work force, Village Manager Ken Fritz said.

The village's proposed tax would generate $23.7 million next year, or about a quarter of this year's general fund revenues.

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

In exchange, the village would absorb the cost of garbage pickup and eliminate its $20 vehicle stickers.

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.

He also noted that the estimated tax rate in Schaumburg would remain lower than in most surrounding communities, with the exception of Elk Grove Village.

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 is also proposing eliminating 25 village jobs that are currently vacant. That would bring the number of full-time jobs eliminated by attrition since 2003 to 98, and the number of part-time jobs to 38.

However, no currently employed staff members will be laid off.

Trustees will likely vote to create a preliminary tax levy next Tuesday, Nov. 24. This would pave the way for a Truth in Taxation hearing Dec. 15 and a final approval vote before the Dec. 27 deadline.

Mayor Al Larson said he regrets that 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, which he felt was generated solely by a desire for more spending.

However, he believes Schaumburg will still stand out as the best place to run a business or own commercial property in the region.

<div class="infoBox"> <h1>More Coverage</h1> <div class="infoBoxContent"> <div class="infoArea"> <h2>Stories</h2> <ul class="links"> <li><a href="/story/?id=336593">Drop in sales taxes brings Schaumburg hard choices <span class="date">[11/15/09]</span></a></li> </ul> </div> </div> </div>