What are these suburban townships doing with all that extra cash?

Some townships hang on to more than they need in a year or even two years

Northfield Township ended 2022 with more than $4.3 million in its reserve fund, enough to cover the township's annual operating expenses for nearly three years without having to ask taxpayers for more money.

In fact, the township's inflated reserves drove current Supervisor Shiva Mohsenzadeh to run for that office in 2021, narrowly unseating longtime Supervisor Jill Brickman.

"Some people think hoarding tax dollars is fiscal responsibility," Mohsenzadeh said. "But I believe if you tax for it, you should have a responsible use for it."

Since the election, the Glenview-based township board has implemented several initiatives to draw down reserves, focusing on social service programming and "capital needs that have gone unaddressed for a long time," Mohsenzadeh said.

A year ago, the township was reporting roughly two years and nine months of operating costs held in reserve, but Mohsenzadeh said that was whittled down to 16.9 months of annual expenses by the end of the fiscal year that ended last month.

Illinois has a law that allows taxpayers to claw back some tax dollars from townships where reserves exceed 250% of the average of three years of annual operating expenses. However, it's not an automatic refund; taxpayers have to seek relief from the courts. A court fight would usually cost much more than the average residential taxpayer would receive because townships generally represent about 2.5% of a property tax bill.

Few suburban townships have hit that maximum threshold, but some government finance experts argue townships should be more transparent and accountable for high-reserve accounts.

"In general, large reserves are a sign that taxes could be cut," said Bryce Hill, director of fiscal and economic research at the Illinois Policy Institute, a conservative think tank. "The Government Finance Officers Association recommends that governments (at a minimum) maintain reserves equal to two months of operating revenue. It raises concerns about overtaxing residents and hoarding funds if the level is too large."

Northfield Township is one of 19 suburban townships with reserves exceeding a year's worth of operating expenses last year, and one of four with enough reserves to cover more than two years of costs, according to a Daily Herald analysis of audits for 51 townships in Cook, DuPage, Kane, Lake, McHenry and Will counties.

Plato Township in Kane County, and Lake County's Lake Villa and Wauconda townships are the other three with reserves exceeding two years of operating costs in their main "general town fund," according to 2022 audits.

Like Mohsenzadeh, Wauconda Township Supervisor Lincoln Knight blames the previous administration for his township's elevated reserves.

"We agree that the amount of reserves we inherited from the prior administration should be spent to benefit our township residents," he said. "To that end, the board is discussing implementing a capital improvement plan for projects."

Lake Villa Township officials are using most of its $3.2 million in unassigned reserves for a $1 million drainage project and a $1.5 million "senior-focused" park near the intersection of Fairfield Road and Grand Avenue.

"These two projects will deplete our reserve, and we will then save for future projects," said Supervisor Daniel Venturi. "We feel it is more responsible to save for large projects than create taxpayer debt."

Plato Township officials said they are also saving for a number of capital projects rather than borrowing.

Hill agreed that costs can be reduced by not seeking loans.

"If township leaders have planned for these ahead of time, they could be paying for them in full without bonds or financing that will carry interest," he said.

But township critics complain that stockpiling reserves for future projects exceeds the scope of a township's prescribed functions, which are providing general assistance to the indigent, assessment of real estate, and maintenance of roads and bridges outside the jurisdiction of all other governmental entities.

In recent years, townships have taken on many social service programs for seniors and children as well as operated food pantries, coordinated emergency management responses and built recreational sites.

"Most taxpayers are going paycheck to paycheck and certainly don't have 2½ years' worth of expenses sitting in savings," said Bob Anderson, a Wonder Lake resident who has pushed for eliminating townships for decades. "It's absolutely ridiculous."

Anderson said that in addition to townships' carrying large reserves in the general town fund, many are also carrying excessive reserves in the general assistance fund, which has limits on how those dollars can be spent.

Currently, a bill in Springfield that has gone through several committee hearings would broaden a township's ability to spend general assistance dollars.

"We've seen a lot of increases in the need for community services since the pandemic," said Jerry Crabtree, executive director of the Township Officials of Illinois.

Of the 51 suburban townships in the analysis, three have reserves less than the 16% minimum recommended: Antioch, Rutland and New Trier.

Antioch Township Supervisor Tom Shaughnessy said 2022's level of 12.1% was due to reserves being used last year on upgrades to a township park. But the township's reserve levels are usually lower than most others in the suburbs.

"We do it by design," he said. "We have a policy of maintaining reserves at about 40% or 45% because we don't want to deal with any tax objection lawsuits where we'd have to give it back."

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