Bloomington aldermen balanced the new city budget without a significant increase in property taxes, but it’s unclear if they’ll be able to do that again a year from now.
The city’s new $211 million budget includes spending cuts and fee increases for garbage, sanitary sewer, and stormwater. Over the last several months, aldermen worked to close a projected $3 million budget deficit for the fiscal year that begins May 1. The final budget was approved Monday night.
The city plans to collect $24.9 million in property taxes next year. That’s the city’s single largest source of revenue, around 12 percent of all incoming funds. (Local and state sales tax are No. 2 and 3.)
Bloomington residents will see a slight increase in property taxes next year—around $4 more for the owner of a $165,000 home. That money will go toward the Bloomington Public Library.
Aldermen decided against a more significant tax hike, despite the deficit. In an interview last fall with GLT, Alderman Scott Black noted that the city hasn’t raised its property tax rate in several years.
“I don’t think there’s any appetite from the council to increase property taxes at this time,” Black said.
Will they be able to stave off a property tax increase next year?
“It’s going to become a critical conversation for us in the next year or so,” said Alderman Karen Schmidt. “It’s made more difficult by all of the changes going on in our business community right now. We have very mindful of some of the turmoil and changes in business models with State Farm, and just the general movement within retail as well. So I get concerned when we don’t get our hands around property taxes, and we offload some of our expenses into service taxes.”
The city may be forced into a decision between raising property taxes or deep service cuts, she said.
“I think (the conversation) is going to have to be within the next year or two. Just realistically. Either that or we’ll have to looking very seriously at reducing services or outsourcing services—those are really our choices. It’s changing the way we do business,” Schmidt said.
Alderman Diana Hauman said they’re already passed the point of needing to raise property taxes.
“We crossed that line many years ago,” Hauman said. “If we’re going to continue to raise (city employee) salaries 2, 2.5, 3 percent every year, we need to be factoring that into our property taxes and adjusting them based on that. One of our biggest expenses is payroll. We keep eating those increases and taking money away from other areas rather than passing that on the property owners.”
In recent years, around 40 percent of the city’s property tax revenue has gone toward pensions.
Facing a similar issue, the Normal Town Council in December approved a property tax increase for police and fire pensions. The increase will cost the owner of a $165,000 home an extra $40 per year.
Alderman Jamie Mathy said increasing life expectancy has added new complexity to pension and property tax discussions. It’s “very possible” to be retired and live for 20 years or longer, he said.
“That’s great for all of us, but the simple math of the system doesn’t work anymore,” Mathy said. “We as a state, a city, as a community, need to come together and realize that something has got to change someplace. I don’t know what that looks like yet, and I’m not advocating for anything.
“But we need to have realistic community conversations about how the math doesn’t add up anymore and what are we gonna do about it? How do we treat the people we made promises to correctly, and plan for the future at the same time?”
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