Time for a property tax in Carol Stream? Mayor, others advocate it; residents don't
Carol Stream officials long have maintained they would pursue a municipal property tax only as a last resort.
But some village board members now appear ready to take that leap after enacting other taxes, freezing expenses and delaying projects in the face of sagging sales tax revenues and financial pressures caused by the state.
On Monday, officials held two of three forums on imposing a property tax as a more stable funding source for village operations. The first Q&A turned into a wide-ranging discussion, with several of the 30 or so residents who attended questioning if the village has done enough to fend off a property tax, attract new business and rein in costs.
For much of its 60-year history, Carol Stream has been one of the few DuPage County towns without a municipal tax. In the 1990s, the board avoided implementing a property tax by establishing a real estate transfer tax.
More recently, a new gas tax went into effect in June 2018 as the first dedicated funding source for the village's road program. Then last July, the village began collecting a liquor tax.
“So we have done a lot to try and hold off on a property tax for as long as we can,” Trustee Mary Frusolone said. “And we have said as a board ... the last four years, a property tax is the very last resort, and I think we're at that point now where it is our very last resort.”
A town of about 40,000, Carol Stream relies heavily on sales tax dollars. The village has increased its sales tax rate twice, in July 2010 and 2018. The total sales tax rate now stands at 8%.
But a slump in recent years and rising police pension costs have contributed to budget pressures, Finance Director Jon Batek said.
Sales tax collections — amounting to 44% of village revenues — fell 6.6% in 2017 and 2.4% in 2018. So far, the village has seen a decline of 4.1% in the current fiscal year that ends April 30.
“It's notable that some years we do quite much better than our peer group and DuPage County as a whole,” Batek said. “But when we're down, we're usually down markedly over our peer group and the county as a whole.”
The village has 164 full- and part-time positions, down by six from the staffing levels at the onset of the Great Recession, Batek said.
If it maintains the status quo, projections also show the village would exhaust capital reserves during the third year of a five-year plan for roadwork and infrastructure. The village traditionally has transferred general fund surpluses to help pay for capital improvements, but it wasn't able to make such a transfer in the past two years.
“We see where things are trending,” Batek said, “so we want to alert the board to this situation before it becomes an all-out crisis.”
But John Zimmerman, a 31-year resident, expressed skepticism the village has done “everything possible” to avoid a local tax. He encouraged the board to “take another look at economic development efforts” and seek more savings.
He also noted that Carol Stream is having the property tax discussion about a year after a $15.3 million reconstruction of village hall. Officials fully funded the project with cash reserves, setting aside up to $19 million for the building overhaul, an interim space and relocation costs.
“I'm not one to have a knee-jerk reaction to government needing to renovate or construct new buildings,” Zimmerman said. “Government is no different from homeowners. Sometimes you've got to provide the right amount of space. Sometimes that needs to be done in the name of efficiency. I agree, but I wonder if our village hall project has had a debilitating impact on standing reserves on capital improvement program funds.”
But Mayor Frank Saverino said consideration of a property tax isn't a new issue.
“I've been saying it for over four years that we need to put a property tax — every budget meeting we've gone into, I've said that we need to put a property tax on, and I'm not ashamed to say that ... but I was overridden.”
Saverino also defended the village hall expansion.
“We could have spent $50 million and went out and borrowed the money and stuck the residents with that interest payment and everything else,” he said. “We'd never do that.”
It's still unclear how much a village property tax would cost homeowners because officials have not yet pinpointed a proposed levy amount. But for every $1 million levied, the owner of a $231,400 home, the median in Carol Stream, would pay roughly $61 annually to the village, according to estimates.
Officials plan to hold the final Q-and-A session at 9 a.m. Sunday. The village would have to adopt a levy by December of this year in order for the municipal property tax to show up on bills starting May 2020.