This week, the Highland Park City Council adopted its 2014 budget and approved the related property tax levy. The City’s operating budget is balanced and concentrates on our core priorities: infrastructure investment, public safety and fiscal stability. State-required pension obligations are being met and we maintain a Aaa rating.
Like any business, success requires short and long-term planning. Non-essential spending was curtailed and major expenditures such as capital improvements, employee-related costs (State-mandated pension obligations and health care costs) were addressed with an eye toward responsible funding over the next five to twenty years. The policies behind this budget focus on responsibly meeting our obligations while minimizing significant changes in resident economic burdens.
Over the course of many months, alternative funding sources were analyzed and considered, but were not found to be viable due to state requirements, contractual limitations, or City fiscal policies that promote financial stability.
Below is an article that will appear in tomorrow’s Chicago Tribune discussing the Council’s decision-making. If you have questions about our budget, check out our FAQ‘s page on the City website www.cityhpil.com or give us a call at 847-926-1000.
By Gregory Trotter, Chicago Tribune reporter
12:35 p.m. CST, December 10, 2013
The Highland Park City Council approved a tax levy increase of 4.85 percent Monday night – down from the proposed 7.3 percent hike that had sparked debate on pension funding last month. The move will lead to property owners paying more taxes.
Rising obligations toward the city’s $90 million pension liability, and about $365,000 in needed capital improvements funded through the library’s portion of the levy, drove up the amount requested from taxpayers, said Highland Park’s finance director, Nikki Larson.
The levy increase will mean about $49 more in city taxes on a $500,000 home, Larson said, and it covers an increase of $1.1 million toward police and fire pensions, from 2013 to 2014, as well as $425,000 toward pensions in 2015.
There was no levy increase for operations within the city’s $85 million budget for 2014, approved earlier this month. The levy was approved 6-1; Councilman David Naftzger cast the lone “no” vote.
“Careful planning reduces the need to have significant ups and downs in taxes over time,” said Mayor Nancy Rotering, reading from a statement at the meeting. “It’s more fair to residents and viewed more favorably by bond rating agencies.”
Naftzger had opposed pre-funding the pensions for 2015 and sought to pay for the library capital improvements with reserve funds, as had been done in recent years. But his ideas did not garner enough support.
“I appreciate everyone’s consideration of my ideas,” Naftzger said in an interview before the vote, “but I’m disappointed they didn’t get more traction.”
In November, the council approved a tax levy ceiling of 7.3 percent to cover the pension costs and the library repairs. Councilmen Naftzger and Paul Frank voted against that increase.
That 7.3 percent projected increase was actually a miscalculation of the levy increase, Larson said Monday.
It should have been closer to 5.2 percent. A new agreement with the library and an adjustment in insurance costs brought the total levy increase down to 4.85 percent, Larson said.
The council will meet with financial experts in early 2014 to continue to discuss how to best approach the pension quandary, Rotering said.
One wild card that will be further explored: the Northbrook bonds.
Highland Park has almost $20 million worth of bonds restricted in its general fund, Larson has said, from 2004, when the city traded bonds with Northbrook. The City Council has so far opted to keep those bonds restricted and to not add them to the pension funds.
Rotering said questions remain about the Northbrook bonds and the impact on the city and its credit rating.
“It has really tied our hands,” Rotering said before the council meeting. “You can see there’s confusion among the council on where that obligation nets out.”
The $1.1 million projected payment for 2014 – an increase of about 42 percent from 2013 – is largely a result of the city’s actuary changing assessments of the mortality table, Larson said in previous interviews. In other words, police and firefighters are living longer, so pension obligations had to be adjusted.
Under state law, municipalities must have the pensions fully funded by 2040, Larson said. The council also voted 6-1 Monday night in favor of a new memorandum of understanding with the Highland Park Public Library.
Naftzger voted against that too.
The three-year agreement contained the $365,000 in capital repairs to the library for 2014, funded through the library levy. Naftzger said those repairs should be made using the city’s reserve funds.
“I support the request,” he said. “I just wish we were paying for it in a different way.”
There was a “tremendous rift” between the city and library in 2009, Rotering said. Funding the library’s needs through the levy, as opposed to reserves, is more transparent and consistent, she said.
“This agreement mends that rift and memorializes the partnership between the city and the library, while providing consistent funding for their infrastructure needs,” she said.
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