November 2, 2011 Clarendon Hills Village Meeting Home Rule Discussion.
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Transcript of November 2, 2011 Clarendon Hills Village Meeting Home Rule Discussion.
November 2, 2011
Clarendon Hills Village Meeting
Home Rule Discussion
Why Home Rule? Why now?
Bond Rating
AAA Rating given in 2011
Only 31 municipalities in Illinois have attained a AAA rating from Moody’s, Fitch or S&P.
General Fund Expenditure Summary
President/Board/Commissions
1%
Administrative/Finance
10%
Police44%
Fire17%
Public Works15%
Community Development
5%
Misc.Administration/Transfers
3%
President/Board/Commissions $85,680 Administrative/Finance $620,970
Police $2,700,805 Fire $1,044,700
Public Works $902,915 Community Development $326,960
Misc.Administration/Transfers $400,150
*Not Including POC Firefighters
Contracting and Shared Services
Engineering Building/plumbing/electrical inspections Plan reviews Information technology Various Public Works services Shared 9-1-1 dispatch Regional major crimes investigations Automatic mutual fire aid agreement (Hinsdale) Library shared services: IT, payroll, tax levy, snow removal,
phone Liability and health insurance pools participation
Contracting and Shared Services
Continued exploration of shared service opportunities Clarendon Hills and Hinsdale have been discussing a
shared police services model that would merge the two departments.
Conversations are ongoing Innovative model would result in costs savings while
maintaining service levels Continued discussion with other units of government
on ways to improve efficiency and cost effectiveness
Budget Reductions
Budget Reductions = $227,065 in FY 11-12
Budget Reductions = $1.76 million in
FY 08-09 through FY 10 -11
Total Budget Reductions = $1.98 million; including $1.1 million in cuts, $904,000 in deferrals
Budget Reductions
Elimination of out-of-state employee training/benefits, reduction in other training
Establishment of new compensation plan that limits employee increases to changes in market conditions
Reduced infrastructure maintenance, tree trimming, sidewalk replacement and general beautification
Elimination of downtown sidewalk snow removal program Reduction of downtown planting program, replacement with
sponsorship program Elimination of positions in Community Development, Finance, and
Police Departments Elimination of needed expansion to the Fire Station Deferral of several capital purchases Increase in employee insurance co-pays
History of General Fund Balance FY2001 – FY2011
Due to the downturn in the economy, excess fund balance over the 40% required was reserved in the General Fund in FY2009 through FY2011, rather than transferred to Capital Projects.
History of General FundRevenues and Expenditures
Future Concerns
Reduction in revenue sharing from the State Additional unfunded mandates Aging infrastructure Costs out of Village’s control 21% of the General Fund’s expenditures go
toward pension and healthcare premiums
Future Concerns
Lack of sales tax base Slow down in real estate growth Dependence on property tax
General FundBudgeted Revenues
General Fund Balance ProjectionsNo Additional Revenues
General Fund Projections Revenue Assumptions
Taxes increase by 2.5%. Intergovernmental Revenues (Income Tax, Sales
Tax, State Use Tax) increase by 1%. Also includes estimated revenues from Infiniti dealership.
Licenses and Permits increase by 2%. Services Charges increase by 2%. Fines and Miscellaneous increase by 3%. Investment Income equals 2% of prior year fund
balance.
General Fund ProjectionsExpenditure Assumption
Expenditures increase by 5% annually.
Capital Fund Balance Projections No Additional Revenues
If additional revenue sources are not obtained, the Village would need to choose between funding operations or capital improvements. Based on the Village’s current ten year capital plan, the Capital Fund balance would be depleted by FY2019.
Impact of continued cuts Slowing down of road/capital program
implementation Scaling back of new rolled concrete curb
installation’s throughout town Further reduction in service levels Slower administrative response times Decreased ability to review operational efficiencies Reduction in community events
Home Rule
What is Home Rule?
Constitution of the State of Illinois:Adopted at special election on December 15, 1970
Article VII, Section 6: Powers of Home Rule UnitsA County which has a chief executive officer elected by the electors of the county and any municipality which has a population of more than 25,000 are home rule units. Other municipalities may elect by referendum to become home rule units. Except as limited by this Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt. Source: http://www.ilga.gov/commission/lrb/conmain.htm
Home Rule in IllinoisAddisonAlgonquinAlsipAltonArlington HeightsAuroraBannockburnBarrington HillsBartlettBatavia
BartonvilleBedford ParkBellevilleBellwoodBentonBerkeleyBerwynBloomingdaleBloomingtonBolingbrookBridgeviewBryantBuffalo GroveBurbankBurnhamCahokiaCalumet CityCalumet ParkCarbon CliffCarbondaleCarlockCarol StreamCarpentersvilleCartervilleChampaignChannahonChicagoChicago HeightsChicago RidgeChristopherCiceroCollinsvilleCountry Club Hills
CountrysideCrainvilleCrystal LakeDanvilleDarienDecaturDeerfieldDeKalbDePueDes Plaines
DoltonDowners GroveDuQuoinEast DundeeEast Hazel CrestEast St. LouisEdwardsvilleElginElk Grove VillageElmhurstElmwood ParkElwoodEvanstonEvergreen ParkFairview HeightsFloraForest ViewFreeportGalesburgGlen EllynGlendale HeightsGlenviewGlenwoodGolfGranite CityGurneeHanover ParkHarveyHarwood Heights
Hazel CrestHerrinHighland ParkHighwood
HillsideHodgkinsHoffman EstatesHomer GlenHopkins ParkInvernessJacksonvilleJohnston CityJolietKankakeeLake BarringtonLake BluffLake ForestLake in the HillsLansingLaSalleLincolnshireLincolnwoodManhattanMarion
MarkhamMascoutahMaywoodMcCookMcHenryMettawaMidlothianMolineMoneeMonmouthMorton GroveMound CityMount Prospect Mount VernonMuddyMundeleinMurphysboroNaperville
NaplesNauvooNew LenoxNiles
NormalNorridgeNorth ChicagoNorth UticaNorthbrookNorthfieldNorthlakeOak ForestOak LawnOak ParkOakbrook TerraceO'FallonOld Mill CreekOnargaOrland ParkOswegoPalatinePark CityPark ForestPark RidgePekinPeoriaPeoria HeightsPeruPhoenixPlainfieldPosenPrairie GroveQuincyRantoulRiverdaleRiverwoodsRobbinsRock IslandRockdaleRolling MeadowsRomeovilleRosemont
Round Lake BeachSaint CharlesSauget
SchaumburgSchiller ParkSesserShermanSkokieSouth BarringtonSouth HollandSpringfieldStandardStickneyStone ParkStreamwoodSycamoreThorntonTiltonTinley ParkTuscolaUniversity ParkUrbanaValmeyerVoloWarrenvilleWashingtonWatsekaWaukeganWest ChicagoWest CityWest DundeeWest FrankfortWestmont*WheatonWheelingWilliamsvilleWilmetteWinnetkaWoodridge
Home Rule in IllinoisAddisonAlgonquinAlsipAltonArlington HeightsAuroraBannockburnBarrington HillsBartlettBartonvilleBedford ParkBellevilleBellwoodBentonBerkeleyBerwynBloomingdaleBloomingtonBolingbrookBridgeviewBryantBuffalo GroveBurbankBurnhamCahokiaCalumet CityCalumet ParkCarbon CliffCarbondaleCarlockCarol StreamCarpentersvilleCartervilleChampaignChannahonChicagoChicago HeightsChicago RidgeChristopherCiceroCollinsvilleCountry Club Hills
CountrysideCrainvilleCrystal LakeDanvilleDarienDecaturDeerfieldDeKalbDePueDes Plaines
DoltonDowners GroveDuQuoinEast DundeeEast Hazel CrestEast St. LouisEdwardsvilleElginElk Grove VillageElmhurstElmwood ParkElwoodEvanstonEvergreen ParkFairview HeightsFloraForest ViewFreeportGalesburgGlen EllynGlendale HeightsGlenviewGlenwoodGolfGranite CityGurneeHanover ParkHarveyHarwood Heights
Hazel CrestHerrinHighland ParkHighwood
HillsideHodgkinsHoffman EstatesHomer GlenHopkins ParkInvernessJacksonvilleJohnston CityJolietKankakeeLake BarringtonLake BluffLake ForestLake in the HillsLansingLaSalleLincolnshireLincolnwood
ManhattanMarion
MarkhamMascoutahMaywoodMcCookMcHenryMettawaMidlothianMolineMoneeMonmouthMorton GroveMound CityMount ProspectMount VernonMuddyMundeleinMurphysboroNaperville
NaplesNauvooNew Lenox
Niles
NormalNorridgeNorth ChicagoNorth UticaNorthbrookNorthfieldNorthlakeOak ForestOak LawnOak ParkOakbrook TerraceO'FallonOld Mill CreekOnargaOrland ParkOswegoPalatinePark CityPark ForestPark RidgePekinPeoriaPeoria HeightsPeruPhoenixPlainfieldPosenPrairie GroveQuincyRantoulRiverdaleRiverwoodsRobbinsRock IslandRockdaleRolling MeadowsRomeovilleRosemont
Round Lake BeachSaint Charles
SaugetSchaumburgSchiller ParkSesserShermanSkokieSouth BarringtonSouth HollandSpringfieldStandardStickneyStone ParkStreamwoodSycamoreThorntonTiltonTinley ParkTuscolaUniversity ParkUrbanaValmeyerVoloWarrenvilleWashingtonWatsekaWaukeganWest ChicagoWest CityWest DundeeWest FrankfortWestmont*WheatonWheelingWilliamsvilleWilmetteWinnetkaWoodridge
Uses of Home Rule Fee recovery Legal and local control Business licensure Intergovernmental agreement flexibility, including
additional opportunities for shared services limited for non-home rule communities
Not subject to property tax caps Impact fees on construction and development Property acquisition and disposal Broader powers to promote and control economic
development Ability to eliminate obsolete organizational arrangements
Limits on Home Rule Article VII does limit certain abilities of home rule municipalities:
Issued debt which is paid by ad valorem property tax receipts may not have a maturity period longer than 40 years
Home rule units have a constitutional debt limit No home rule unit may define or provide for felonies, or for Class A
misdemeanors without specific statutory authority The General Assembly can also vote to impose additional limits on
home rule units of government Village Board still made up of representatives of the community; still
subject to local election Self imposed limits (optional):
3/5 majority needed to raise property taxes beyond property tax cap Additional meeting and notice requirements for new taxes proposed Requirement to hold an advisory referendum if petitioned by the
residents on certain revenue issues
Home Rule in Practice Research shows that home rule municipalities do
not have a higher property tax rate on average than non-home rule municipalities. (Banovetz 2002; Banovetz and Kelty 2002; Dye and McGuire 1997; Wood 2011)
Historically, voters in home rule communities want to retain home rule. There have been 29 elections to rescind home rule. Only four have been successful, the last of which was in 1983. There is no evidence of abuse of home rule powers in the four cases in which it was rescinded.
Home Rule Research Committee
Home Rule Committee Process
Committee was formed in May, all volunteers who stepped forward were put on the committee.
In June, a presentation by Village Staff on Home Rule, and the Village’s financial condition. Committee members identified information they felt they needed to make a decision on the issue.
In July, the information requested by the committee was presented to them. The Committee requested that guest speakers be invited to the next meeting that had experience with and knowledge of home rule.
In August, Mayor David Brummel of Warrenville, IL, and Patrick Lucansky of the law firm Klein, Thorpe, and Jenkins spoke. Village staff also presented additional financial analysis information requested by the Committee at the July 7th meeting.
In September, the committee discussed five motions prepared by Village staff relating to the appropriateness and potential use of Home Rule in Clarendon Hills. The Committee approved the final report document for submittal to the Village Board.
Home Rule Committee Findings
The attainment of Home Rule status is appropriate for the Village of Clarendon Hills at this time: 10 yes, 2 No
Home Rule status should be utilized to affect an increase in the Village’s property tax rate beyond the authority allowed Non-Home Rule municipalities: 9 Yes, 3 No
Home Rule status should be utilized to affect increases in other revenues, as determined by the current and future Village Board, to offset increases in property taxes: 11 yes, 1 no
The Village Board should utilize non-financial Home Rule powers as they deem appropriate and necessary: 9 yes, 2 no, 1 abstention
If a Home Rule referendum is attempted and fails, the Village should pursue an increase in property taxes by referendum: 11 yes, 1 abstention
Maintain General Fund balance through Sales Tax, Demolition Tax, and other existing revenues
Capital Improvements Tax
Proposed Home Rule Revenue Options
Home Rule Revenue Options
Home Rule Sales Tax
Places for Eating Tax (PFE) could be repealed and an overall 1% sales tax could be put into place
This would generate $200,000 a year ($100,000 if PFE Tax were repealed)
Would eliminate local administration of the PFE Tax
Sales Tax Rates for Surrounding Communities
as of July 1, 2011
Clarendon Hills 7.25%
Burr Ridge 7.50%
Darien 8.25%
Downers Grove 8.25%
Hinsdale 8.25%
LaGrange 8.75%
Oak Brook 7.75%
Western Springs 8.50%
Westmont 7.75%
Willowbrook 8.25%
Willow Springs 9.50%
Home Rule Revenue Options
Demolition Tax
Demolition impacts roads and stormwater issues that have a cost for the Village
Lake Forest and Evanston have imposed a $10,000 tax on the demolition of buildings in their community
If the Village imposed a $10,000 tax on residential property, it would generate an additional $120,000 annually based on FY2011 figures
General Fund Balance Projections with Home Rule and Other Existing Revenues
Beginning in FY2013, Home Rule revenues include a 1% Sales Tax, repeal of the Places for Eating Tax, and a Demolition Tax. In addition, Utility Taxes and Rental/Lease Income are reassigned to the General Fund beginning in FY2017.
Capital Improvements Tax
Village’s current road program 50% funded by SSA, 50% funded by Capital Fund
SSA money is received from property owners who live in the impacted area
Property owners on non-Village roads do not pay into SSAs
Costs to set up the 2011 SSAs totaled $95,000
If a new “Home Rule Capital Improvement Property Tax” were established, it could replace the SSA program, be restricted to fund only capital, and receive funds from all property owners including those who currently do not pay into SSAs
Capital Improvements Tax
CAPITAL PROJECTS FUND BALANCE PROJECTIONS
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021
REVENUES $1,549,215
$1,179,601
$1,872,719
$1,911,315
$1,954,700
$1,251,293
$1,130,831
$1,147,342
$1,164,572
$1,182,804
EXPENDITURES
$1,716,371
$1,466,552
$1,332,427
$1,309,987
$1,265,946
$1,321,396
$1,257,344
$1,261,654
$1,253,199
$1,250,207
ENDING FUND BALANCE
$4,486,696
$4,199,745
$4,740,037
$5,341,365
$6,030,120
$5,960,017
$5,833,504
$5,719,192
$5,630,565
$5,563,162
Utility Taxes and Rental/Lease Income are reassigned to the General Fund for operations beginning in FY2017. Additionally, a property tax that is restricted to fund only capital improvements would provide the Village with an additional $690,000 in revenues beginning in FY2014. These revenues equate to a tax rate of 0.1284 per 100 EAV.
Capital Improvements TaxImpact on Taxpayer
$690,000 in additional revenues equals a property tax rate of 0.1284 per 100 EAV.
The owner of a $500,000 home would pay an additional $214 annually; a 22% increase in the Village’s portion of the tax bill or just 2.6% of their overall tax bill.
With Home Rule status, the Village could reduce this amount as further cost-cutting measures are identified and economic activity improves.
Property Tax Rates per 100 EAV
Why not a property tax referendum?
Property tax increase would be 36 percent higher than Home Rule option, in order to adequately fund operations and capital improvements
Less flexibility to respond to changing economic conditions
Eliminates the non-financial Home Rule benefits
Property Tax Rates of Surrounding Communities
Community
Tax Rate per 100
EAVBurr Ridge* 0.63 Darien* 0.73Downers Grove 0.56 Hinsdale 0.32 LaGrange 0.73 Oak Brook 0.00 Western Springs 1.06 Westmont 0.54 Willowbrook* 0.54 Clarendon Hills 0.54
Clarendon Hills Tax Rate with .1284 Capital Improvements Tax 0.67
* Includes separate fire protection tax, if applicable
2009 levy is the most recent available for communities
Village Property Tax – 500,000 Home Value2009 Levy
* Includes separate fire protection tax, if applicable
Questions?