Property-tax rate hike is likely in Naperville

Naperville's property tax rate could be going up for the first time in six years.

City revenue projections for both the telecommunications and real estate transfer taxes are down by nearly a million dollars each. Combined with slower than anticipated growth of other revenue sources, the city's finance department is suggesting almost a 10-cent hike in the property tax rate next fiscal year.

That means the owner of a $400,000 house in Naperville would pay about $117 more for the city's portion of their tax bill -- assuming the value of their property stays the same.

The city council will take its first swipe at setting the next fiscal year's property-tax rate at a 7 p.m. workshop today at city hall, 400 S. Eagle St.

"What I really want to discuss is the projections staff has for revenue," Councilman Kenn Miller said. "But it does appear we'll have a rate increase in some form."

The council will be asked to give preliminary approval to a possible tax rate that will be passed along to DuPage and Will county assessors. The rate will be approved at a later council meeting and once those assessors announce assessments next year, the council likely will abate a portion of tax rate.

Because the council can't increase the property-tax rate once it reports the figure to the assessors' offices, it routinely sets it at higher point to be safe.

In the past, increases in property values allowed the city to cut its tax rate and still receive more tax money. But now, with property values beginning to stagnate, that additional money may not be available unless the city increases its tax rate.

Councilman Richard Furstenau believes the city can make do with a tax rate that stays put.

"We may have to cut a few things, but we've got some things most cities don't even think about," he said. "We have to learn to live within our means and we won't have to raise the rate a nickel."

Finance Director Doug Krieger said an increase is necessary to make up for the loss of nearly $2 million in revenue from the telecommunications and real estate transfer taxes. Those losses represent about 3 cents of the nearly 10-cent hike request.

Krieger said competition in the telecommunications market and the increasing popularity of Voiceover Internet Protocol technology has cost the city nearly $1 million in telecommunications tax revenue this past year.

A slowdown in the real estate market cost the city $900,000 in transfer taxes, Krieger said. Both residential and commercial property sales are down evenly, he said.

The new fiscal year begins May 1, 2008.

By the numbers

A look at the recent history and possible future of Naperville's property tax rate by fiscal year.

2009 (proposed): 78.76 cents (per $100 of equalized assessed property value)

2008 (current): 69.66 cents

2007: 71.25 cents

2006: 74.38 cents

2005: 77.89 cents

2004: 87.51 cents

2003: 87.50 cents