The Normal Town Council on Monday OK’d an estimated $13.1 million tax levy that, if formally approved after a Dec. 7 public hearing, is likely to keep the property tax rate flat at about 1.5%.
Also at the remote meeting, Normal finance chief Andrew Huhn shared an update on COVID-19’s impact on the town's budget, saying the outlook is better than originally predicted.
The town’s property tax revenue is used to fund several areas: the general operational fund, police and fire pensions, the Illinois Municipal Retirement Fund, Social Security and Medicare, debt services, and special service area bonds. The revenue also funds the Normal Public Library.
Despite the proposed 2020 tax levy remaining the same as 2019, the town plans to cut about $1 million — or 1.5% — from its operations fund this year, and move that money to its police and fire pension obligations, said Normal City Manager Pam Reece.
The police and fire levies have increased significantly from last year, partially because Normal began phasing in information on life expectancy of participants, and new rules that the pensions be 90% funded by 2040, according to council documents.
Last year, $1.6 million went into the general fund. But for the 2020 levy, only $530,000 will go there, with the balance applied to the public safety pension funds, she said.
This move earned praise from several people at the meeting.
“We’re making a stronger committment to fund our pensions. And then we're forcing ourselves to look at additional cuts to meet the operational challenges,” said council member Karyn Smith.
Council member Scott Preston said the decision shows the town’s commitment to police officers and firefighters while keeping the town portion of a homeowner’s property tax bill flat.
“We are not kicking the can down the road,” added council member Kevin McCarthy, about the town’s effort to fund the pensions, alluding to state government pension funds not being adequately funded.
The total tax levy estimate is based on 2020 assessed values, but the real amount of revenue received may be slightly higher or lower when the exact rate is finalized in January. The Town of Normal’s assessed valuation is $888.7 million, according to council materials.
Equalized assessed valuation (EAV) is about a third of a home’s value. So, for the owner of a $150,000 home, the property owner is taxed on $50,000. Assuming the tax rate comes to $1.50 per $100 of assessed value, that homeowner would pay about $750 of their total tax bill to Normal.
COVID impact
Huhn told the council that conservative projections for the budget, when the COVID shutdown began in March, combined with $2.2 million in federal aid, means Normal is in a better situation than earlier estimates.
But he remains cautious, especially with this week’s surge in COVID cases meaning another possible lockdown could be coming, adding the financial projections are just COVID modeling at this point. “The numbers are moving around quite a bit,” he said.
Huhn broke his presentation into two parts: Looking at the current budget year, and fiscal 2022 projections.
In March, Normal adjusted its fiscal 2021 budget to expect a $10.4 million decrease in revenue in its $69.9 general fund. But, as of Monday, the city projects only a $3.6 million revenue shortfall, finding it at $66.3 million. On the expense side, the town cut $8.6 million in expenditures, mostly through reduced fund transfers, and a decrease in payroll--with COVID cutting the need for seasonal employees, for example.
“That leaves us with a pretty good surplus” of about $4.9 million, said Huhn, while predicting the town’s 5-year outlook will be tighter--with increasing amounts needed each year for pensions, and a return to full operating expenditures. That, combined with a stagnant economy, would likely mean budget deficits in fiscal 2022 through fiscal 2025, he said.
With more than six months of real pandemic-period data, Huhn said the new projected loss to fiscal 2021 revenue is about $7.3 million. However, Normal saw gains of $1.5 million in unexpected revenue--from use tax (including internet sales), building and plan permit fees (including work at Rivian), and three months worth of the new local motor fuel tax funds. The town also got a boost of $2.2 million in reimbursements from the federal Coronavirus Relief Fund, via the Department of Commerce and Economic Opportunity’s Local CURE program.
Normal has weathered this year better than expected. But looking toward the future is a challenge, said Huhn. Normal’s finance planners are projecting a $69.8 million FY2022 budget--a $1.9 million decrease from what Normal planners had projected, pre-COVID.
Huhn expects a $4.6 million decrease in 2022 revenue based on COVID’s impact, the proposed flat property tax levy, and decreases in some other tax revenue. But that would be offset by $2.7 million gained mostly through a year’s worth of local motor fuel tax revenue and use tax.
“We’re going to still show growth,” said Huhn, adding he’s resetting the clock, looking at 2019 budget numbers, because COVID has caused the town to lose a whole year of projected growth.
It’s still a question as to when revenue will return to a pre-COVID economy, said Huhn, who doesn’t expect that to arrive until late 2021, or even a year after that. “It’s really a challenge to determine when to put revenue (projections) back up,” he said.
All of this essentially needs to be figured out in January, to pass a budget by March, he added.
In other business, the council:
- Conditionally approved, in a 6-1 vote, the final plat of the Illinois Art Station (IAS) subdivision, at 101 E. Vernon Ave. and 605-607 S. Linden St. Monday’s vote combines the multiple properties into one piece. The 2-year-old nonprofit center, which plans to build its new location at the Normal site near Constitution Trail, creates hands-on activities for youth and their families, with a special focus on underserved populations.
- Approved, in a 6-1 vote, spending about $31,170 to purchase and install a multi-pump upgrade for the Ironwood Golf Course irrigation service. The council waived the formal bidding process to buy the pump from Aurora-based Absolute Services, based on it being the sole proprietor of the upgrade for the 2008-installed system.
- Approved unanimously, its annual intergovernmental agreement with the city of Bloomington, to allow Normal police to use the Bloomington police shooting range facility, with a 1-year-contract at the same rate as last year, about $8,200. Normal has used the Bloomington facility since 1994.
- Learned that due to the pandemic, Uptown Normal won’t be hosting its annual Santa Station. Reece said town staff are working with Illinois State University to develop an alternative “Santa experience” that will be announced soon. The annual “Calls from Santa” program is happening in December, she said.
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