Understanding The Real Estate Tax Issue

Lately it seems that I am spend a good amount of my time educating the residents about the finer points of municipal government so they can understand the misleading and false promise that they have made by my opponents.  Unfortunately, I am also educating them at the same time on subjects they should already be fluent with if they are going to run the Village. 

The most common complaint that I hear from residents is that the real estate taxes are too high.  I believe I can identify with that since I pay about $14,000.00 in taxes each year.  High taxes affect me just like everyone else.  However, the Village of Crete is only responsible for about 12.6% or one eighth of the total real estate tax bill, about $2.4 million dollars per year.  While this may seem like a lot of money, it only represents about 23% of all the dollars the Village uses to operate in a year.  It is the only predictable source of income the Village has.  In the coming year, your tax dollars will be collected in the following amounts for the purpose shown:

  • General Operations                    $540,000.00
  • Street Lighting                            $  46,000.00
  • Police Protection                        $300,000.00
  • Police Pension  Fund                 $230,000.00
  • Public Benefit Fund                    $  18,000.00
  • Ill Muni Retirement Fund        $120,000.00
  • Social Security                           $150,000.00
  • Bond & Int. Debt Service          $  94,250.00
  • Fire Protection                           $650,000.00
  • EMA                                             $  61,000.00
  • Auditing & Accounting               $  36,000.00
  • Liability Insurance                     $225,000.00
  • Crossing Guards                         $  28,000.00

All spending not covered by the real estate tax collections shown above are covered by revenue generated from other sources.  The amounts shown above, for the most part, are equal to or less than what the yearly expenditure will be in the fund.  As an example, we spend just over $28,000.00 to pay the crossing guards that assist children cross streets on their way to and from school.  Our Liability Insurance bill is right around $225,000.00 per year.  On the other hand Police Protection costs about $1.9 million per year, with the additional dollars coming from a variety of other sources to make up the difference.  If you are going to cut real estate taxes, which of the above items can actually be cut, and if you do cut the tax collections by lowering the rate, where will new revenue come from to replace the loss?  Keep in mind that currently every penny of tax rate is equal to roughly $18,000.00 in tax dollars to the Village.  That same penny in tax rate, viewed as a reduction in the tax rate, on a house valued at $150,000.00 will produce a $5.00 reduction in the tax bill.  Put another way, you have to drop the levy request (as shown above) by $18,000.00 to see just a $5.00 reduction in the tax bill of a $150,000.00 home.

Note: This illustration applies only to the Village portion of your real estate tax bill.  Similar calculations could be performed for all taxing bodies listed on the tax bill to illustrate what affect a penny reduction would have for each.

As one can see, cutting taxes is a difficult task, because it takes a certain amount of money to cover all the village funding needs, and the costs of operation are always increasing.  Funding municipal government is a complicated and difficult task that requires skill, planning and knowledge of where money comes from and flows to.  My superior knowledge of this subject allowed me to skillfully guide the Village through the last very financially difficult years.  My management has produced a good bond and financial rating, a small reserve fund and a very conservative approach to spending.  No other candidate for Village President has anything close to this experience and record of successful operation.  There is no room for error in finance.  It’s so easy to spend money when you don’t have to be responsible for where it comes from.

Advertisements