ROCK FALLS – Pension costs are going up, and property values are going down.
A likely result of both occurrences is that the Rock Falls government will increase its tax levy for 2014 by 4.99 percent.
Because the increase would be less than 5 percent, no public hearing is required.
But the City Council will give the proposed levy increase – from $1,052,421.67 this year to $1,102,681.85 next year – a second read at its next meeting, scheduled for Dec. 17.
City Administrator Robbin Blackert said the average Rock Falls homeowner will see about 17 percent of their property taxes go to the city.
Blackert said the tax increase is largely the result of increased pension contributions and a substantial loss in equalized assessed valuation over the past year.
“The value of property as of Jan. 1, 2013, showed about a $2 million loss,” Blackert said.
Several factors come into play regarding EAV, making it difficult, if not impossible, to plan for.
“There are abandoned and foreclosed properties, and the loss of businesses that all drive down EAV,” Blackert said.
Economic development is the biggest catalyst in driving valuations back up, but Blackert said a big development project takes about 3 years to make a difference.
Rising pension costs account for 47 percent of the levy increase. The most significant increase in city contributions was a 32.78 percent hike in police pension funding. The Illinois Municipal Retirement Fund, which is for city and school district employees, will see an increase of 21.74 percent in city funding in 2014. Close behind is the fire department pension, which increases by 21.73 percent.
The fire pensions are fully funded, while the police department is funded at 80 percent. Blackert says the police department is in good shape, because the investments in that pension fund are getting a good rate of return.
“Our pensions aren’t in horrible shape; we’re holding our own,” Blackert said.
Rock Falls will not have a public hearing before adoption of its levy. According to Illinois Truth in Taxation law, a notice must be published in a newspaper and a public hearing held, only if the proposed aggregate tax levy is more than 5 percent greater then the previous year’s tax extension.
Finance Committee Chairman Glen Kuhlemier said the council and department heads always make a concerted effort to keep the levy increases under 5 percent. This year was particularly challenging, given the EAV and pension situations.
“The terrible EAV reduction really sharpens an increase in the levy, and the pensions we don’t have control over,” the Second Ward alderman said. “But we were able to hold the line on levies we had control over. I think it’s a good levy, and we’ve done our due diligence.”