St. Charles tax bills unlikely to drop

It’s no secret St. Charles property values are declining after the housing bubble. One of the only positive aspects of that drop in value for a homeowner is, possibly, a corresponding drop in property taxes. That won’t happen for St. Charles homeowners under a new budget for the city, which begins its new fiscal year May 1.

The city staff pitched a budget to the city council Monday night that maintains the current property tax burden for homeowners. New numbers from Kane County indicate a $90 million drop in the property tax base in St. Charles. That’s about a 6 percent drop. But city expenses are rising, on average, 3 percent a year compared to only a 1 percent average annual increase in city income. The city can’t afford a large loss in property tax dollars.

The result is a balanced-budget plan that would keep homeowners paying the same amount of property taxes they did as when their homes were worth more. For example, owners of a home with a 2009 property value of $300,000 paid the city about $730 in property taxes. That same home saw its value fall to about $281,000 in 2010. But the owners would still pay the city $730 in property taxes in the new budget plan. About 11 percent of a St. Charles resident’s property tax bill goes to the city.

Finance Director Chris Minick said, overall, the city has navigated the downturn in the economy pretty well. “There is evidence and proof that the city has been living within its means,” Minick said.

Chief among that evidence is a projected budget deficit of $511,000 for the 2010-11 fiscal year that shriveled to about $75,000 as of this month. Minick cited several expenditure cuts, the creation of the 2 percent tax on alcohol last June and the revival of some sales tax income as reasons for the smaller deficit. The deficit may shrink more if the city receives federal relief dollars to offset the costs incurred during the recent blizzard.

Other income losses, such as from the former St. Charles Countryside Fire Protection contract, are being offset by income from the city selling property and realizing savings on the bond payments for the new public works facility. Savings are also expected from employees who take the buyout the city recently offered.

Minick said all that leads the staff to believe the city is on sound footing to have a balanced budget for 2011-12. However, a couple of unknown factors may yet cause big problems.

One issue is skyrocketing fuel costs. The other issue is the potential for state lawmakers to take away the portion of the state income and sales tax local governments receive. Mayor Don DeWitte said local mayors are doing everything they can to prevent that loss. Such a change would strip the city of about $12 million, or 30 percent of its expected income.

The city will hold a public hearing on the budget on April 18, and the council will vote on the plan that night.