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ELMHURST CITY COUNCIL OKS PROPERTY TAX HIKE FOR PENSIONS

Illinois Policy Institute/ Brendan Bakala

The Chicago suburb’s decision to raise the levy will result in a 3.1 percent hike in the city’s portion of property tax bills, marking the first such increase in four years.

Elmhurst homeowners will see the city portion of their property tax bills go up in 2018, as the Elmhurst City Council has passed a $300,000 increase in the city’s property tax levy, according to the Chicago Tribune. This amounts to an increase of 3.1 percent in the city portion of homeowners’ property tax bills, in addition to an increase in the public library’s portion of the bills.

It’s the city’s first increase in its property tax levy in four years.

The city’s property tax levy will increase to $10.2 million, up from $9.9 million. The city will use the revenue to contribute an additional $300,000 to Elmhurst’s police and fire pension funds.

Alderman Kevin York, who chairs the City Council’s Finance Committee, said the increased contributions were required under state law and actuarial guidelines, according to the Tribune.

The Elmhurst City Council had been reducing residents’ property taxes for three years prior, and for good reason.

Elmhurst sits on the border of Cook and DuPage counties, both of which rank in the top 10 counties for Illinois’ highest property taxes. Cook County ranks eighth-most expensive in Illinois when it comes to property taxes, with a median bill of more than $4,500 annually, according to 2011-2015 data from the U.S. Census Bureau. However, homeowners in DuPage County have the second-highest median property taxes in the Land of Lincoln, paying more than $6,200 a year.

Nationwide, DuPage homeowners pay the 27th-most expensive median property tax rates in the country.

Unfortunately for Elmhurst homeowners, the city’s portion of their property tax bills is most likely to grow due to increasing costs for Elmhurst’s police and fire pension funds.

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Elmhurst’s fire pension fund has less than 68 cents on hand for every dollar owed in future benefits, even though taxpayer contributions to Elmhurst’s fire pension fund increased by nearly 33 percent from 2012 to 2016. Despite the large increase in taxpayer investment, the pension fund’s funding ratio increased by just one percentage point – up to 67.7 percent in 2016 from 66.7 percent in 2012.

Elmhurst’s police pension fund is in worse shape, even though taxpayer contributions have increased by more than $1 million since 2012. From 2012 to 2016, taxpayer contributions increased by more than 56 percent, but the funding ratio went down to 64 percent in 2016 from 67 percent in 2012.

Elmhurst and other towns like it should have the choice to move away from costly pension funds. One alternative would be retirement plans modeled on the State Universities Retirement System’s 401(k)-style plan. The plan has been operating for nearly two decades, and more than 20,000 state university workers have opted out of traditional defined-benefit pensions in favor of the 401(k)-style plan.

Unfortunately, towns like Elmhurst are mandated by state law to maintain and fund costly pension plans, meaning taxpayers, especially homeowners, are ultimately on the hook for pension failures.

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 for families struggling to pay higher property taxes as their own incomes stagnate.

Unless such reform materializes at the Statehouse, homeowners should brace for heftier property tax bills.

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