2019/11/4 - Mayor's Column: Proposed Property Tax Levy
“An Open Door to O’Fallon”
A Weekly Note from Mayor Herb Roach
“‘Tis impossible to be sure of anything but Death and Taxes.” These famous words first written by Christopher Bullock in the early 1700’s still hold true today. Taxes are an unpopular yet needed way to help provide services that would otherwise not be funded and delivered. I am just like most people in this great country – I dislike paying property taxes. However, being involved in local government, specifically O’Fallon, gives me a sense of appreciation for what property taxes pay for. I am happy to pay for excellent police, fire, and EMS protection, roads that can be travelled upon, excellent schools, and a great library.
Out of all taxes, the one that I hear the most comments about is property tax. The City of O’Fallon makes every attempt to not heavily rely on property tax. Fortunately, we have a strong commercial base that creates a good amount of sales tax, which helps pay for many of the City’s services.
Property tax comprises only 2% of the City’s budget and is ranked eighth among the City’s General Fund revenue generators. If you look at your property tax bill, only a small percentage (around 9.5%) goes to the City of O’Fallon.
Another famous quote, this one from former US Supreme Court Justice Oliver Wendell Holmes: “Taxes are what we pay for civilized society.”
The City of O’Fallon uses property tax to support General Fund programs such as police, street maintenance and construction, and general administrative functions. Property taxes also are levied for Special Revenue Funds such as Parks, Emergency Medical Services, pension obligations, the O’Fallon Public Library and the O’Fallon Fire Department.
So why am I telling you this? Well, it is because I want to provide an update on property tax.
The proposed 2019 Tax Levy for the City of O’Fallon, that the O’Fallon City Council is reviewing, is .9441. This proposed tax levy rate is lower than last year’s rate of .9480. Which is again lower than the tax rate of 2012! This is the third year in a row that we have been able to reduce the rate.
Remember that the tax levy is based on dollar amount, not by rate; therefore, if the estimated EAV is even higher than projected, the tax levy rate will be lower and vice versa, if the EAV is lower, the tax levy rate will be higher. Even though we must submit our request in December, the County does not provide the final EAV until April, so we must work on estimates until then.
Many communities in Illinois and other states are forced to substantially increase their property tax levy year after year. In Illinois specifically, most municipalities are being pinned into a corner by their pension liabilities – forcing them to raise their property taxes. However, in O’Fallon that is not the case. Our pension liabilities are very well-funded, which allows us to not only directly fund essential services through taxes, but in some years, decrease the amount of property tax you pay to the City of O’Fallon! We are always looking at ways to improve our processes, better utilize technology, and create savings using competitive bidding and purchasing.
The City Council has a priority to keep property taxes as low as possible. However, the challenges to successfully complete that goal are continuing to grow. This year, the State of Illinois voted to increase minimum wage. The minimum wage increase will be:
- Effective 1-1-2020 $9.25
- Effective 7-1-2020 $10.00
- Effective 1-1-2021 $11.00
- Effective 1-1-2022 $12.00
- Effective 1-1-2023 $13.00
- Effective 1-1-2024 $14.00
- Effective 1-1-2025 $15.00
This will impact many of the 200+ part time and seasonal employees that work in the Parks & Recreation and Library programs. Increasing minimum wage by this large of a percentage over the next six years will greatly increase the cost of providing services.
In addition, the increasing impact of the Disabled Veterans’ Standard Homestead Exemption is placing pressure on each local taxing body’s ability to properly fund services without having to increase the tax levy. According to St. Clair County, this exemption totals over $61 Million in O’Fallon, a 25% increase from last year. This means that almost 10% of residential property in O’Fallon is exempt from paying property tax due to this exemption.
As residents of O’Fallon, you should always be able to reach out to your elected officials and ask questions about what is happening in O’Fallon. Having open communications is important to me and something I care very deeply about. Thank you for reading, and please remember, my door is always open!