Carol Stream's first property tax in decades would cost $232 per home on average
After months of discussions, Carol Stream officials are now answering the most basic question about establishing a municipal property tax: how much it will cost taxpayers.
The owner of a home worth $231,400 - the average in Carol Stream - would pay $232 annually to the village if trustees approve a recommendation by financial planners to levy $3.8 million.
Trustees held three forums about imposing a local tax to provide a more stable funding source for village operations that are now heavily reliant on sales taxes and consumer spending.
During the meetings, residents pressed trustees to specify how much the village would charge in property taxes, but Mayor Frank Saverino said board members were still considering a range of levy amounts.
"You're not saying, 'You know what? If we don't get this, we're going to have to cut five police officers, or we're only going to plow you once a time during a storm.' Give them an option so they know what's going on," DuPage County Board member and Carol Stream resident Jim Zay said at the final forum.
The issue has raised broader questions about whether officials have done enough to rein in costs and attract new business to avoid the village's first property tax in nearly 40 years.
"If you're going to put property tax on the businesses here, and you've already upped the sales tax, you've put a liquor tax, you've put a gas tax, when you put a property tax in, just be careful of diminishing returns," Zay said.
Board members also have faced questions for spending cash reserves on an expansion of village hall and for agreeing to loan the library district up to $2 million for a renovation of its Hiawatha Drive building. Both the original library and village hall date to the 1970s.
About a year after the $19 million municipal center project, officials are warning that, should the village maintain the status quo, projections show Carol Stream running out of capital reserves during the third year of a five-year plan for roadwork, addressing creek erosion and infrastructure repairs.
The village traditionally has transferred general fund surpluses to help pay for capital improvements, but it wasn't able to make any transfer in the past two years.
"That's even after we've frozen expenditures in the budget," Village Manager Bob Mellor said. "This year, we froze over $600,000 in the budget because we're anticipating revenue shortfalls."
Mellor said village staff made the levy recommendation based on projected expenses in the capital improvement program, the instability of existing revenue streams and rising police pension costs.
Sales tax revenues - amounting to 44% of village income - 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.
With adoption of the $3.8 million levy, property taxes would account for 12 percent of total revenues, Mellor said. Compared with other DuPage County towns, property taxes on average amount to 25% of all government revenues.
Along with Carol Stream, Oak Brook and Willowbrook are among the few suburbs without a municipal property tax.
Trustees plan to consider the tax levy next Monday. The board is set to hold a public hearing and issue a final vote on Nov. 18. The municipal property tax would then show up on bills starting May 2020.
Saverino has said the board also could look to eliminate vehicle stickers. He's also defended the library loan and 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. We'd never do that."
The library district, meanwhile, is requesting a $3,674,461 levy. The district's share of the property tax bill for the owner of a $231,400 home would remain flat at an estimated cost of $224.
The library will pay back the village's loan over 10 years through a property tax increase reflected on tax bills issued this year. The library first levied for debt service on the loan last year. The owner of a home valued at $228,500 will pay $14.67 annually in additional property taxes.
The library has budgeted $3.425 million in capital reserves for the $5.425 renovation. The village loan will fund the remaining $2 million.
Under an intergovernmental agreement, the library must exhaust the portion of reserves earmarked for the project before it can obtain the loan from the village's general fund reserves.
Library Director Susan Westgate said in an email Tuesday the district expects to make a request in November to start receiving loan proceeds from the village.