Upcoming tax hikes? Kane County mulls over 2024 budget options

Some form of a tax increase for Kane County residents will be at least part of the discussion as county board members piece together a plan for the 2024 budget over the next two months.

Through policy changes and a vote this week, the board signaled it will seek new revenue to pay for the county's largest ongoing day-to-day expense - government employee salaries.

Almost all of the county's employee salaries are paid out of the general fund. In 2012, the county levied just under $54 million in taxes for the general fund. In 2022, that levy amount reached $57.7 million. In the decade that timeframe spans, the levy never jumped by more than 1.24% year to year.

That relatively flat budget was fueled by a push for a frozen property tax levy driven by a Republican-led and controlled county board. But Democrats now have an unbeatable majority on the county board, and there's been a push for employee raises only stymied by the COVID-19 pandemic. With fears of the virus dampened, the talk of raises, hiring more employees and paying salaries competitive with neighboring counties has grown.

The county board contemplated several forms of tax increases last year. But with the entire county board up for re-election, there weren't enough board members willing to fight the tax raise battle with their constituents. That ballot fear is also gone.

County board members approved budget policies earlier this year that force the board to balance the coming budget without using any savings. In other words, the county's income must at least match what it spends to pay all the bills. The budget for the current year uses $16.7 million worth of savings to reach a balance.

Adding on to that is a slew of employee union contracts under negotiation. In the past 15 years, the county has never seen a new union contract that didn't include a pay raise - either due to an agreement or an arbitration ruling.

Even without accounting for any raises or new employees, Kathy Hopkinson, the county's CFO, told the board it has a $5 million deficit heading into 2024, leaving only two options.

"If you are taking home a paycheck every week of $1,000, but you're spending $1,200, where are you going to get that extra $200?" Hopkinson asked. "The county needs to consider some options. There's only two ways to do it - increase revenues or cut expenses."

Those increases could come in the form of a property tax increase, a county gas tax increase, a creation of a county sales tax or some combination of any of the three.

The 24-member county board this week voted 15-7 in favor of exploring a budget with a 5% increase to the property tax levy - the maximum allowed without getting permission from voters. The vote allowed just the construction of a budget plan with that increase built in. It would take another vote on the tax levy to raise property taxes.

Board member Mo Iqbal was among the loudest "no" votes cast. He pointed to federal money the county still has from the COVID-19 pandemic and predictions of as much as a $10 million increase in interest income for the county as evidence no new taxes should be collected.

"There should be no tax increase," Iqbal said. "It should be zero. I don't agree we can't use savings. We have windfall money sitting there."

Board county board Chair Corinne Pierog, along with board members voting to consider the larger budget, said the county must move toward a sustainable budget plan for the long term.

"You can use (savings), but what do you do when the money runs out?" Pierog asked.

In earlier budget discussions, Pierog hinted her personal preference for a tax increase might involve more of a sales tax than a property tax hike.

During budget discussions, she highlighted charts showing residents pay 76% of property taxes collected. That compares to 13% for commercial property and 9% for industrial property. Pierog also pointed to how neighboring DuPage County collects more than twice as much sales tax money compared to Kane County. DuPage also has double the population of Kane County, a fact Pierog also highlighted with a chart showing that 54% of Kane County is still farmland.

The county board must lock in a new budget and any potential tax increase by the end of November.