Elgin residents facing multitude of tax and fee hikes

A 2018 budget proposal for Elgin includes a new gas tax, an increase in water and sewer rates, and other tax hikes.

A budget proposal before the Elgin City Council would mean higher property tax bills, a new 4-cents-per-gallon gasoline tax, a sales tax hike, and gradual increases in Elgin water and sewer rates through 2022 that would add up to a 42 percent hike over that time, according to the Daily Herald.

Although the proposal tries to spare residents and homeowners from a big hit to their wallets, Elgin residents will still see higher property taxes.

While Elgin’s property tax levy will not go up to fund city services, it will rise to pay for Elgin’s pension costs and bond payments, according to the Daily Herald. And while the general property tax levy will remain flat, Elgin’s levy for its police pension fund will rise by 2 percent, and the levy for the fire pension fund will increase by 6 percent.

Though Elgin’s water and sewer rates have remained relatively flat for years, the budget proposal provides for a gradual rise in rates that will result in an increase of 42 percent when fully implemented in 2022. In 2017, a typical bill in Elgin was $49.50 a month, according to the Daily Herald. Elgin Chief Financial Officer Deb Nawrocki estimated that under the new proposal, that monthly bill will rise to $70.29 in 2022 when the increase is fully phased in, the Daily Herald reported. Nawrocki said the average across seven counties in the region is $62.75.

Fees for refuse and recycling services will go up 3 percent annually through 2020, due to contractual obligations.

Along with fee increases for basic city services and a new gas tax, residents also face increases in existing taxes. Under the proposal, the city sales tax will increase to 1.5 percent from the current 1.25 percent. And the city’s hotel tax would increase by two percentage points, up to 6 percent.

In addition to these increases in fees and taxes, the plan calls for $1 million to be cut from the city budget in 2018, mostly from reductions to firefighter overtime.

The proposal also provides for Elgin to spend $6.7 million in city reserves through 2020.

Elgin residents are in a bind. Taxes are going up, as well as fees for basic services, and yet the city still has to dip into its reserves to make ends meet. Reining in taxes over the long term and ensuring Elgin’s fiscal stability mean reforming the city’s largest cost drivers.

Although the funding levels of police and fire pension funds have improved since 2012, both the fire and police pension funds have less than half the money on hand to pay out future benefits, according to a report released in October by the Illinois Department of Insurance.

These funds remain virtually bankrupt, despite the fact that taxpayer contributions to Elgin’s public safety pension funds have increased by more than 237 percent since 2007, according to the Daily Herald. And taxpayers are going to be on the hook for even more money.

This underscores the need for state lawmakers to protect homeowners from skyrocketing property tax bills. Passing a property tax freeze on homeowners’ actual bills (not just the levies of local governments), and requiring voter approval for property tax hikes are two powerful reforms that would go a long way to help families struggling to pay higher property taxes as their own incomes stagnate.

But thanks to state law, Elgin residents have little choice but to pay up. State law mandates that cities maintain and fund costly defined benefit pension funds for police departments and professional fire departments.

Until real reform happens, Elgin residents should not be surprised to see heftier tax bills.