By Ted Schnell • BocaJump | Nov. 29, 2011
City Manager Sean Stegall appeared to receive general support from the Elgin City Council on Monday as he delivered the promised new version of the proposed 2012 budget that aims to bring property tax relief even as it adds new taxes to the city’s mix of revenue sources.
Stegall, in a presentation Monday night to a special committee of the whole meeting of the City Council, detailed the plan, which he said is much more complicated than three other versions of the budget, yet makes significant strides toward eliminating a structural deficit while reducing the city’s reliance on property taxes as its chief source of revenue.
Further, he said, the new plan provides homeowners with tax relief because the city would reduce its property tax assessment, and those lost revenues would be replaced in exchange for the revenues produced by some of the new taxes.
City officials have pointed to the city’s reliance on property taxes as one reason Elgin faces a structural budget deficit of as much as $13 million this year, largely because of an average 20 percent drop in property values in the Kane County portion of Elgin. Two other key city revenue streams also are expected to drop next year, due to the aftermath of the Great Recession. The administration has said repeatedly that Elgin must diversify its revenue streams if the city’s financial health is to improve and become more stable.
Stegall told council members he intends to ask them to give initial consideration to the supporting ordinances for the new budget during Wednesday night’s special meeting of the council committee of the whole. That meeting is scheduled to begin at 6 p.m. in the City Council Chambers.
The City Council began its deliberations with three budget options — the “balanced approach,” favored by the administration for making cuts, establishing new fees and raising the home-rule sales tax and floating the city’s property tax levy to filled a budget gap of as much as $13 million; the Alternative A budget, which sought to fill the budget gap with taxes and new fees; and Alternative B, which proposed draconian measures — mass layoffs and cuts – to balance the budget.
Stegall’s proposal Monday night, which he called the “balanced approach, Version 2,” likewise aims to balance the budget through cuts and new taxes and fees. Key to the new taxes proposal, however, is the total revenue generated would not change from his original proposal: $100.93 million.
As in the administration’s original balanced approach, Version 2 calls for spending cuts totaling $2.8 million, which would include the elimination of 12 full-time equivalent city staff positions.
But Version 2 has added a number of new taxes whose revenues will be used to offset a decrease in Elgin’s share of property taxes that would total $1 million in 2012 but which would increase to a $10 million reduction by 2014, representing a 25 percent drop in the city’s share of property taxes over the next three years. By 2014, property taxes would account for 28.6 percent of the city’s annual revenues instead of 43.8 percent in 2011, Stegall said.
As in the original balanced approach, residents would pay for trash removal; but the $18-a-month fee originally proposed would drop to $13.30, a direct “pass-through” charge representing the cost of that service. Also in Version 2 are a new electricity tax and a natural gas tax, which combined would cost the average homeowner a little more than $63 a year, officials said.
