East Dundee approves 13 percent property tax levy hike

East Dundee trustees have decided to raise the village's property tax levy by 13 percent in an attempt to strike a balance between more aggressively funding pensions and not overburdening residents.

The village board voted 4-2 Monday to approve collecting $640,000 in property taxes for 2017, representing a $73,607 increase over the previous year. The levy hike - the village's first in about six years - will allow East Dundee to fund a higher annual pension contribution, start earning interest on those investments and potentially avoid a pension shortfall in the future, Village Administrator Jennifer Johnsen said.

Maintaining a relatively frozen levy for several years has limited the village's ability to raise its annual pension contribution beyond the statutory minimum, she said. State law requires municipalities to fund 90 percent of their pension costs by 2040; East Dundee's police pension fund is about 52 percent funded.

"What we're trying to do is raise the tax levy a little more ... so we can avoid a balloon payment to the residents later," Johnsen said. "Anything more than the statutory minimum is the right thing to do."

The approved levy will bring in about $110,000 less than the 32 percent hike trustees were considering last week. That proposal would have put the village on track to fully fund pension obligations by 2036, as recommended by an independent actuary, Johnsen said.

But after hearing from residents who called such a hike outrageous, Trustee Scott Andresen suggested adopting a lower increase at a more gradual pace. "It's been a challenging year," he said. "I'm wondering if we can meet somewhere in the middle."

With a 13 percent increase, owners of a $200,000 home will pay an additional $51 per year in property taxes, Johnsen said.

Trustees Jeff Lynam and Dan Selep voted against the measure, saying they would rather tax more now to put the village in a better position in the future. The higher levy amount would have resulted in a $126 annual increase for the same home.

State Rep. Allen Skillicorn, an East Dundee resident and former trustee, urged the board to keep the levy flat another year, saying residents shouldn't be bearing the brunt of the village's rising expenses. When the village adopted home-rule status several years ago, he said, trustees vowed to not raise property taxes above a state-imposed tax cap - the lesser of 5 percent or the rate of inflation - placed on nonhome-rule communities.

The 13 percent hike fulfills that promise, Johnsen said, as it only recaptures what the village would have collected if it had increased the levy each year by the consumer price index instead of keeping it flat.

Though the village will likely have to revisit the topic next year, Andresen said, the approved levy allows the village to make meaningful progress on its pension costs while giving trustees time to "see what we can do collectively to generate revenues in another way."