Arlington Heights 2026 budget: Spending is down, so why is levy up?

Arlington Heights officials have proposed a 2.29% property tax levy increase they say is mainly due to increases in public employee pension costs.

Village board discussions on the levy and 2026 budget are set to begin Monday night.

The planned tax hike — characterized by village officials as being at a rate lower than current inflation — has faced criticism since it’s tied to the proposed $224.3 million budget that represents a 14% decrease over this year’s spending plan.

After the proposed budget and levy was released online late last week, residents have taken to the village’s social media channels to ask why property taxes are set to increase if spending will decrease.

In a budget questions and answers section of the village website, officials explained that the all-purpose general fund — where most municipal services are accounted for — is the primary and largest of 25 individual funds within the overall budget.

But the other funds have less flexibility, officials said.

The individual tax levy amounts for the village’s police and fire pension funds — as determined by independent actuaries — increased by $1 million, and $60,000 for non-union personnel.

No levy increases are proposed for the debt service to pay for general obligation bonds, or for capital project funding. There were slight decreases for the police and fire protection tax levies, officials noted.

The overall 2.29% levy increase is slightly less than earlier projections that called for a 3.63% increase. At the village board’s direction, Village Manager Randy Recklaus had department directors submit individual budget proposals at 2% below board-approved budget ceilings.

“Maintaining responsible stewardship of taxpayer resources remains the village board’s top priority,” Recklaus said in a statement. “This proposed budget reflects careful financial planning that balances today’s needs while investing in future initiatives.”

The proposed levy increase comes after village trustees in August implemented a 5% tax on streaming entertainment subscriptions. They expect the new tax will generate $480,000 a year, helping to cover a portion of personnel costs of six new paramedics who will staff a fifth fire department ambulance.

Board members in August also decided to retain a 1% municipal tax on grocery purchases due to expire statewide, saying it would have been a $1.3 million hit to a consistent revenue stream.

The 370-page proposed budget includes a bevy of spending on infrastructure, including $5.9 million to resurface and rehabilitate deteriorated street pavement and curbs; $3.8 million to reconstruct significantly deteriorated streets, curbs and concrete panels; $4.5 million to replace aging water mains; and $3.9 million to replace lead service lines.

The slightly smaller spending plan is the result of completion of large capital projects and purchases including stormwater mitigation work, officials said.

The board’s department-by-department budget review will begin at 7 p.m. Monday at village hall, and continue at 7 p.m. Wednesday. If necessary, a third budget meeting will be held at 7 p.m. Thursday.

The board will vote on the budget and levy Dec. 1.