Lincoln aldermen vote to reduce property tax levy
Part 2: Voting session discussion by aldermen

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[December 27, 2016]  LINCOLN - When the city of Lincoln Council met on Thursday evening of last week, the first several minutes of the evening was a public hearing regarding the reduction of property tax levies by the city. The property tax bills that would be issued by the Logan County Treasurer’s Office will be based on property tax assessments in 2016, payable in 2017.

The city was asked to consider reducing its tax levy by a net amount of $42,455. The net figure would come from reducing the General Fund Tax Levy by $50,000 and also increasing the dollars designated for the Sewer Bond payments by $7,055.

The discussion began after Tracy Welch made a motion to hold the tax level. The motion was made according to the wording on the voting agenda, which added some confusion to the voting process. Before holding a public hearing, public notices must be published in a print newspaper. The notice was published on Thursday, December 15th, saying the hearing would be to consider holding the tax level. Later, a different notice, reflecting what had been discussed at the council's last committee of the whole meeting was submitted to, and published by, Lincoln Daily News, reflecting a proposal to reduce the tax by the net amount of $42,455.

Asked to clarify the situation and why the motion had to be made this way, City Treasurer Chuck Conzo explained. By law, the city had to go with the motion that correlated with the public notice that was published in a print paper, even though the online version was more reflective of what the council might want to do. This would mean that the council would vote on the flat amount, yay or nay, and if it failed, it could then vote on a new motion that would reflect the reduction in the tax levy.

Todd Mourning and Chuck Conzo

Todd Mourning was then the first alderman to address the real topic for the evening. He said first he wanted to thank all those who had participated in the hearing. He said that all the speakers made good points, and that he felt all the aldermen want to see the citizens of Lincoln have more money in their pockets. However, he said the city still has to run, and there is an anticipation that expenditures for contractual obligations are going to go up by about $120,000 in the coming year.

In addition, he said, there are projections that the property tax this year as it stands is going to fall by about $35,000. He said that meant the city was going to start this next year with $155,000 less available cash. Add to that, a $50,000 tax decrease, and the city will be “in the hole” a total of $205,000.

(According to figures presented by Mourning, the property tax revenue last year was $1.8 million, and this year it is projected at somewhere in the range of $1.77 million, equaling the $35,000 reduction indicated above.)

Mourning said that there is an expectation that the TIF payment for 2017 can be made, at least in part, from TIF Tax collected, but he called it is a dice roll because the city won’t know for sure what the tax assessment on the TIF participating properties is until later in 2017.

On top of this, Mourning noted that there are uncertainties on a state level that could impact the city. The state is looking at placing a freeze on property taxes, which means that whatever the city levies this year, could be the amount set for the next several years.

Mourning asked if the city did reduce the tax levy, according to the Consumer Price Index (CPI), how long it would take for the city to get that $50,000 back.

Conzo explained that the city cannot arbitrarily raise its tax levy. It is bound by laws that allow that the city only raises taxes according to the annual CPI figure. In this case, he said it could take four to five years of adjusting within that CPI to get the $50,000 back.

Mourning said that he had talked about this with Conzo and that Conzo has said he would like for the city to have a good plan for the reduction of taxes.

Conzo confirmed that was what he preferred.
Mourning said then the city could formulate a plan and move forward later.

Mourning added that the city levy is still only about 12 percent of the total bill the county sends out. He said what is needed is to get all the taxing bodies together to work out a reduction plan that would have some impact.

Conzo went on to comment that he would be in favor of putting that $50,000 into the pension funds. He said that the unfunded liability in the Police and Firemen’s Pension Funds are a large concern. He said, again, that dollar amount would not make a large impact on the pensions, but it would be a step in the right direction.

Rick Hoefle

Rick Hoefle is in favor of cutting the tax levy. He spoke up reminding aldermen that the average income in Lincoln is only $29,000. He said of that amount, $15,000 is spent local annually. He said this means that for Lincoln residents, every dollar counts.

He said in addition, there are things the city has done in the past that he doesn’t believe it will be doing in the future. Notably, he said the city had hired Retail Strategies, paying them $25,000 last year, for what he called “a whole lot of nothing.”

The city had also budgeted money to go to the Logan County Alliance which it won’t need in the future.

Hoefle said adding to those reductions, the increase in revenues from Video Gaming, and the city would more than make back the $50,000.

He added that the TIF, if it pays out as it was estimated it would, would make a big difference in the bond payments for the TIF investment for the Lincoln Grand 8. Hoefle said, in the beginning, it was estimated that the theater would carry an assessed value in excess of $8 million. He said he doubted it would be that much, but hoped it would be assessed at half that amount at $4 million, taxed accordingly, and the amount would go to the bond payment.

Hoefle noted loudly, “This is ridiculous that we are even arguing this. Let’s do something for the citizens. People say the council looks inept - Yes we do!! Let’s get this thing taken care of and continue to look for savings.”

Tracy Welch and Mourning

Tracy Welch said he was curious about some of the numbers that were being thrown out. City Administrator Clay Johnson was not on hand for this meeting, but Welch noted that Johnson had discussed the increased expenditures next year in contracts (primarily union contract agreements) with Mourning and had at the same time told Hoefle the city could manage a $50,000 reduction in the tax levy.

Mourning said that the reason it is “do-able” was if the TIF does fully fund itself, then there will be about $170,000 in the General Fund that does not have to go to the TIF bond payment. Balance that with the expected increase in expenditures of $120,000, then the city has made back the $50,000, less the amount needed for the increase in the sewer bond payment.

Mourning said that the TIF was the risk.

Welch said that made sense, but the fact remains, if this risk doesn’t pan out for the city, then the city has lost $50,000 that it will take years to recover based on the allowable CPI increases.

He also noted that there are expenditures that will not occur as Hoefle had stated, and also as Hoefle had stated the video gaming was much more than projected at budget time last year. He said, in all, there was potential for additional revenue in spite of the TIF.

He commented, “I agree with Alderman Hoefle. I’m a little confused why we are not willing to take this risk and take this leap of faith. We took it for a project that cost the community hundreds of thousands of dollars. It is $6.00 on average across 5,811 assessed properties in the city of Lincoln. Six dollars doesn’t seem like a lot, but it is a meal. Six dollars is trivial, but the message that it sends to the community and potential buyers, as some of the realtors will tell you, is worth it.”

[to top of second column]

Hoefle and Jeff Hoinacki

Hoefle commented that another item in the budget was $40,000 for the façade grants, paid out of the General Fund. He said that would not be needed next year.

Jeff Hoinacki asked if Hoefle was suggesting doing away with the façade program. Hoefle said, no, but the TIF revenues should be financing that grant in the future.

Michelle Bauer

Bauer spoke saying that she felt her role as an alderman was to look at the needs of the city and to be forward thinking and open minding for the entire city, as well as Logan County. While she liked the idea of saving money for the citizens, but she also needed to look at what needs to be done in the city.

Bauer said the city has only one side of the square done in the downtown revitalization. The city now owns a building for a police station but will need money to repurpose the building. The city still has a goal of coming up with a new location for the city’s fire department.

She agreed that perhaps Retail Strategies was not someone the city would do business with in the future, but there would still be a need for some type of economic development.

She said that even though she understands the need for funding the pensions, she’s not sure she would be in favor of moving the $50,000 to that line item. For herself, she said, the thing that makes the most sense is to hold the levy flat again this year and keep that money in the capital projects fund where it can do the most good.

Bauer commented, “People keep saying to us as a council that we are stagnant. I think we need to move, move on the things we said we were going to do.”

Conzo and Hoefle

After Bauer had finished, Conzo said he wanted to clarify that the $50,000 is not actually in the Capital Projects line item. He said the reduction would come from the General Fund, but yes, that reduction could be passed onto the Capital Projects, but it didn’t have to be.

Conzo said that if the council chose to keep the tax levy flat and earmark the $50,000 it is keeping to go into the pensions, he would be all if favor of that action.

Hoefle spoke up saying that initially when he had spoken along with Jonie Tibbs to Conzo about reducing the tax by a much larger amount, Conzo was in favor of it. Now it appeared that Conzo was waffling in his position. Hoefle brought up again that the utility tax was designated for the pensions and was supposed to take care of the unfunded liability over time.

Conzo said he was not waffling in his position, but that the city could do both – designate the $50,000 and use the utility tax. He said that a $50,000 tax decrease could be done, but he would prefer the money go to the pensions.

Steve Parrott, Conzo, and Welch

Steve Parrott said he thought the city had a plan for funding the pensions. Conzo said, yes it did, to fund to the minimum requirement of 90 percent as set forth by the state.

Conzo would go on to explain that the city plan to fund the pensions to 90 percent by the year 2040 would meet the state requirements. However, he said as the council was set to hear from the city auditors on January 3rd, it would become clearer that the lack of funding in the pension program was a big issue. He said the actuarial assessment of the pensions was indicating that the city needed to be more aggressive than the state requirement because as long as the pensions are not funded, it is going to be listed as a concern in the annual audits.

He said it is not a finding in the audit, as something the city is doing wrong, it will simply be that the audit will indicate the city is not doing enough to fully fund the pensions.

Parrot went on to say that he did understand the concerns of the Lincoln citizens, noting in particular Ilene Owen who had spoken at the public hearing. He added that when people are leaving Illinois, the city cannot expect to attract them with such high property taxes.

Welch commented while the city is cutting, other taxing bodies are planning increases for this next payment year. He said that more than 50 percent of the taxes collected are going to Lincoln Community High School District 404 and Lincoln Elementary Schools District 27.

LCHS District 404 is 33.9 percent of the total, and Welch said the school district is going to raise its levy to cover the travel costs that will be associated with changing conferences next school year.

Aldermen take two votes

As the discussion of the topic came to an end, aldermen discussed how to proceed with the voting. The original motion had been for a flat tax levy. This would equate to holding the tax at the same dollar amount as last year, but shifting the way the money would be disbursed by the city. In the end, the city would increase the dollars earmarked for the bond payments and decrease the money placed in the General Fund, but that would be an internal adjustment, not reflected on the tax bills.

Welch asked if the motion could be amended to show the desired reduction. The answer was, no, it could not. Aldermen would have to vote on the flat tax first. If that motion passed, then the business would be completed. If the motion failed, aldermen could then make a second motion.

The vote for the original motion was taken and failed 5-3. Those who voted “yes” for a flat tax levy were Bauer, Hoinacki and Mourning. Those who voted ‘no’ were Hoefle, Kathy Horn, Parrott, Jonie Tibbs and Welch.

When that motion failed, a second motion was made by Hoefle and seconded by Welch. The motion was to decrease the amount of tax levy going into the General Fund by $50,000 and increasing the amount earmarked to go to the bond payment by $7,055 equating to a net reduction of $42,455,

When the vote was taken, the yay’s and nay’s were reversed with Bauer, Hoinacki and Mourning voting “no” and Hoefle, Horn, Parrott, Tibbs, and Welch voting “yes.” Therefore, the motion carried by a vote of 5-3.

Lincoln property owners will see this tax reduction in their bills issued in 2017.

[Nila Smith]

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