Delays by the state in agreeing on a property tax relief plan will cost the City of Evanston about $300,000 in extra interest payments, Finance Director Matt Grady told aldermen Monday.

The prolonged legislative struggle over the tax deal means second installment tax bills won’t be sent to taxpayers by the county until December, instead of in August.

While that gives taxpayers the chance to earn a little more interest on their money, it puts a pinch on the city, which has bills to pay in the meantime.

Grady told aldermen he plans to ask them at their next meeting, Nov. 12, to approve a plan under which the city would take out a line of credit which it could draw upon if needed to cover expenses until tax payments are received.

In response to a question from Alderman Ann Rainey, 8th Ward, he said the city could cover its needs from existing reserves if all the property tax payments arrived by the end of December, but he’s not comfortable they will.

He said many communities are issuing tax anticipation warrants to cover the shortfall, but he believes the line of credit will prove to be a less costly alternative.

Reviewing the city’s financial performance half way through its fiscal year, Grady said most revenue sources other than the property tax are running at or ahead of their budgeted levels.

City Manager Julia Carroll said the city is meeting its budget targets for spending at the year’s half-way mark.

She said that looking ahead to next fiscal year she again sees another gap between revenue and expenses that will have to be closed during the budget process. She said it appears the size of the gap will be about $2.4 million, with the increase largely driven by rising health insurance costs.

She said she’s asked city department heads to provide a priority list for their expenditure requests and will also be looking at options for increasing revenue.

Regarding the city’s pension-funding crisis, she said she believes the first year of increased payments the city’s new actuaries say is need for the fire and police pension funds can be covered by transferring money from the city’s existing fund balances. That could raise the combined pension payments from $8.9 million to $12.1 million.

She noted that aldermen have said they’re reluctant to hit taxpayers with a property tax rate increase just after the county has reassessed all the homes in town.

Bill Smith is the editor and publisher of Evanston Now.

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