DeKALB – The DeKalb City Council is debating whether property taxes should fully fund the city's pension obligations or if the general fund should continue to support some of those costs.
As part of ongoing discussions about the fiscal 2015 budget that starts July 1, DeKalb aldermen, city staff and Finance Advisory Committee members met to discuss the city's proposed $79 million budget, including its reportedly unstable pension funding practices.
The proposed budget calls for the city to levy $4.27 million in property taxes, a 0.6 percent increase over fiscal 2014, that will net the city $25,809 in additional revenue, although city staff didn't know how much that would cost for the average taxpayer.
Although the levy would allow the city to fund the $3.5 million in police and fire pension obligations next year, it will only fund 31.6 percent of the city's Illinois Municipal Retirement Fund costs and 94 percent of its Federal Insurance Contributions Act costs. In turn, the city will use $571,000 from the general fund to cover the shortfall, a practice City Manager Anne Marie Gaura called unsustainable.
“Are we going to raise the levy or continue to rob from the general fund?” 6th Ward Alderman Dave Baker asked, adding he didn't fully support raising taxes, but didn't want to see the city continue to fall short.
Committee member Mike Peddle estimated the levying for the remaining $571,000 would cost taxpayers around 10 cents more per $100 of assessed valuation, or about $44 more a year for the owner of a home with a $150,000 assessed value who claims the homestead exemption.
The additional 10 cents would raise the property tax rate to around 90 cents per $100 of assessed value, excluding library operations.
Fifth Ward Alderman Ron Naylor and 3rd Ward Alderwoman Kristen Lash contended the city has held the line on property taxes because the dollar amount the city collects has not changed much in previous years.
“When I look at it from year to year and see that I'm paying the same amount from year to year, that's not an increase,” Lash said. “I'm paying the same amount.”
David Jacobson, 1st Ward alderman, contended “holding the line” could be seen as a tax increase considering the drop in property values.
Assessed property values in DeKalb for this tax year are $485 million, which is roughly 9 percent lower than last tax year.
Peddle made the argument that if the city designated the levy to pay for pension costs, the levy should rise with those costs. He argued the money is coming from the same place whether it is property taxes or general fund dollars.
"Those come out of the taxpayers' pockets, too," he said.
The DeKalb City Council plans to address some budget concerns during it's regular meeting at 6 p.m. May 27.