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Evanston City Manager Wally Bobkiewicz says his goal in preparing the proposed city budget for next year is to end a string of annual property tax increases.

Bobkiewicz told a citizen budget input meeting attended by just four residents Wednesday night that while property taxes for pensions and debt payments have increased over the last three years that he hopes to avoid increasing those, or the general fund property tax, in the 2013 budget.

“I hear loud and clear that there is a sensitiviy to all taxes,” not just property taxes, the city manager said.

And he noted that some residents say they’d rather see fees for services rise rather than have property taxes increase, because property taxes, but not the service fees, are deductible from federal and state income taxes for taxpayers who itemize their deductions.

“No one wants to lay more people off,” Bobkiewicz added, but said it may not be possible to balance the budget without layoffs.

The proposed budget is scheduled to be released Oct. 12. The City Council is expected to adopt next year’s budget before Thanksgiving.

Assistant City Manager Marty Lyons said that city expenses so far this year are running 3 percent below budgeted amounts and revenues are running 4 percent ahead of budget — which has eased the strains of preparing for next year.

After several years of cuts, department heads have been told to prepare “steady as she goes” budget plans for next year, Lyons added.

Health care costs for city employees continue to increase at between 6 and 8 percent per year, depending on the health plan.

But Lyons noted that the new fire union contract calls for employees to pay a percentage of the premium, instead of a flat dollar amount, which should mitigate the impact of future premium increases on taxpayers.

And Bobkiewicz said a city audit that required employees to provide proof of eligibility for dependents they claimed on their health policies turned up 25  people who weren’t supposed to be there.

“An ex-wife, and lots of grandchildren,” Lyons said, estimating that cutting coverage to those people would save the city about $200,000 a year.

Bobkiewicz said the employees listing phony dependents had been disciplined.

In response to a question, the city manager said he agreed that the city needs to do a better job of tracking whether its economic development efforts generate new revenue for the city.

But he said he believes the new Trader Joe’s market will lead to a net increase of $500,000 a year in sales and liquor tax revenue — after subtracting any losses to other businesses from the opening of the new store.

He added that athletic ticket tax revenue from Northwestern University has increased by about $100,000 — in part as a result of the city’s efforts to promote the games.

And Bobkiewicz said the city’s effort to increase revenue by selling water the city pumps from Lake Michigan to other communities could start to pay off next year.

Lincolnwood could be the first community to come online, with a relatively small capital investment, he said, while adding the nearly dozen other towns the city is talking to will probably take several years and major capital costs for new pipelines.

Bill Smith is the editor and publisher of Evanston Now.

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12 Comments

  1. Forget what they say, what matters is what they do and did

    City taxes have shot way up in the past several years. I think it increased 7 percent in 2011 alone. Property values have sunk in that time.

    Water rates – up. The city passed a 2 cent gas tax in 2010. Parking tickets – up. Yet, there has never been a pay freeze on union salaries. Instead, all union contracts got a raise. Aldermen and the mayor got a pay raise this year.

    The Township Assessor received a pay raise despite the fact voters want to dissolve it.

    The city spent $2 million to land Trader Joes across the street from Jewel and Whole Foods. Does anyone really think Jewel, which is on the market for sale, or Whole Foods, that has two stores within blocks of each other, will remain open? When one of them closes the net revenue in sales and liquor taxes will be less. Then the question will be, was it worth paying $2 million of our tax money to land Trader Joes at that location?

    Our aldermen just voted to create a TIF for a shopping center built 30 years ago. Under the TIF, the tax revenue the shopping center creates will be used for the next 20 years to rehab or rebuilt it rather than going into our school and city services. Now aldermen want to create a TIF essentially to construct an office building at the vacant lot at the southeast corner of Chicago and Main. These TIFS put more burden on hard-hit taxpayers.

    Wally can talk the talk but did he walk the walk? It's an election year so of course he's going to say no new taxes.

    When my daughter gets older the best advice I think I can give her is  – pay little attention to what the boys say. What matters is what the boys do.

    The same logic applies here. Pay little attention to what Wally and our aldermen say. Pay attention to what they do.

    I hope we get good aldermen and mayoral candidates to challenge the incumbents this year. We need change and we need it now!

  2. HO HO HO

    If Wally comes through, the question is, what else will cost more. Also, just because they hold the line on property tax does not mean your city taxes will not rise. Most will pay more to make up for all the TIFs, wine bars, and parking lots.

     

  3. Bad news for Evanston & Illinois

    This afternoon the Illinois Teachers' Retirement System (TRS) released their new actuarial assumptions.

    1. Return assumptions are overly optimistic and shows they're not ready or able to face reality

    2. Shows their UNFUNDED liability at $51.3 Billion (up from $43.5 Billion, but they don't report that #)

    3. Shortly after their press release they issued a correction with the following very troubling sentence, "The incorrect numbers used in the news release are what the annual contributions would be if Illinois followed standard actuarial formulas and practices instead of formulas required by state law."

    Standard Actuarial formulas don't apply to Illinois?

    Instead, Illinois uses "formulas required  by state law" ?

    This is bad news for Evanston & Illinois because it shows the extremely challenging fiscal situation our state is in, it shows incompetence at TRS (how can they fumble their most important press release of the year?), it suggests that fewer businesses will want to invest in Illinois (and create jobs) Why invest in Illinois when their is a massive liability hanging over your head? and the list goes on.

    While TRS tells you that they generated a 9.3% rate of return over the last 30 years, what they don't tell you is that 30 years ago the 10 year bond peaked at over 15% and today it is 1.8%.

    TRS tells you that they lowered their return assumption from 8.5% to 8.0% and that 47 funds have an investment return at 8.0%. What they don't tell you is that the trend for investment returns for funds which recently reviewed and revised their assumptions is BELOW 8.0%. For example, Indiana recently lowered their return assumption to 6.75%. California Teachers (CalSters) lowered their return assumption from 7.75% to 7.50% in February 2012.

    These troubling results suggest that Springfield will be more likely to shift the "normal cost" of teachers pensions to local communities. For Evanston, that means either a $6mm tax increase or cost cuts.

    Evanston cannot rely on Springfield to solve its problems.

    Springfield lacks money and Springfield lacks leadership.

    Remember, Mike Madigan is still the Speaker of the House.

    He's still digging our state into a hole after 40+ years.

    You can find the full details at the TRS website:

    http://trs.illinois.gov/subsections/press/pressroom.htm

     

    1. Governor want federal pension guarantee

      Wall Street Journal 9/21/12

      While that might shift the burden to all taxpayers to cover the Illinois bungling, it allows the state [and other bodies] to keep making promises they cannot keep and making poor decisions.  The state must come to grips with the problem not try to push them off to the 'man behind the tree.'

      1. Pension Bailout for California ?

        If the Illinois Governor was the Federal government to give a guarantee to our Pensions with the chance the taxpayers will be held to paying.  Do we want the California governor request the same for them ?  Any number of other states ?

        Do Illinois taxpayers want to pay for California and other states ?

    2. How much higher would taxes need to go?

      a question for James, Ponzi, or anyone else in the know-

         Hypothetically, if Illinois pushed all TRS pensions to Evanston AND Evanston funded it's pension fully without cutting services- How much higher would property taxes need to go? What % increase in property taxes would be needed?

      I hear all the numbers, and I see the upcoming crisis- but I'd love to see the hard numbers of how it would affect my family so we can plan accordingly and/or sell our home now and move.

      Thanks a bunch.

       

       

      1. Best guess estimate how much higher

         Jen

        Assume under funded by 180,000,000 and we borrow the entire amount to fully funded, given we could,  assume 3%, without any exact analysis, let say a payment of about 8 million a year.  Divide by 400,000 which is about a 1% Property tax increase, a 20% increase, looking at $10,000 tax bill – assume city about 20% – you would be looking at $400 dollars a year, ofcourse if you use different numbers as to the under funding it could go much higher.

        I am certain Jim Young can give you a better analysis, but remember it is not the unfunding of these two funds alone, add in capital debt, which is underfunded, add in the teachers pensions, add just plain tax increases, you could double you entire property tax bill, look at what the state did, it double the income tax, and still did not solve the problem.

        Ofcourse were would you move? There are a few places that are better, for taxes, I seriously doubt they are going to double the tax bills, most likely the will just continue along until they go broke and give the debtors, pennies on the dollars legal or not.

        I serious doubt adding the extra $700,000 will have any large effect on the total picture.

        1. Junad Rizki’s careful analysis

          "Assume under funded by 180,000,000 and we borrow the entire amount to fully funded, given we could,  assume 3%, without any exact analysis, let say a payment of about 8 million a year.  Divide by 400,000 which is about a 1% Property tax increase, a 20% increase, looking at $10,000 tax bill – assume city about 20% – you would be looking at $400 dollars a year, ofcourse if you use different numbers as to the under funding it could go much higher."

          For the cartoonist with all of the answers, this is classic.

          1. Why don’t you give your analysis?

            What is your analysis? What you answer?  My answer is not exact, but lets see your analysis.  Bottom line there is not real solution, unless things improve in the economy, which is not likely.  Will this go bankrupt? It well could, will the taxpayers double thier taxes? not likely.  Also if you change the assumptions, lower returns this goes up much higher.

            Lets see your classic solution or answer.  Should I assume you would be happy paying, the extra money or are you one of the people who think the extra $700,000 a year will make a real difference?

            Rereading Jen's orginal post, I realized I did not even consider the teacher pension problem, that our less than bright state officials want to push on to the local tax bills.  I have no data, but its clear  the tax bills would get very expensive, to the point middle income people, not the top 1% would not be able to afford homes in Evanston. Ofcourse even the top 1%, might not be able to afford tax bills that double.  ( $30,000 to $60,000 over a few years, how many large homes on Sheridan road can be turned into bed and breakfasts?)

             

  4. Good meeting but some new troubling issues

    As one of the four citizens who attend the meeting it was a good meeting, given the fact the Mayor and council members were mashing it up.  Wally allowed citizens to ask questions, and three of us did.

    There is going to be a tax increase, that was clear, it may be smaller than past years, but it will be an increase,  ( I know that for a fact, I am not saying how much, since I fiqured it out through a private conversation after the meeting )

    Wally did state he has heard what I have said about them misrepresenting the past tax increase, so I am waiting to see if he does follow through and gives out the correct numbers rather than hide them.

    The city still has debt problems beyond the pension in its capital programs.  Wally did admit that they have problems with their capital program, he even stated that was one of the reason he shut it down for almost two years , although I do not see any real major improvements. 

    Wally also admit another troubling fact, that they are not doing enough capital projects since they lack staff in the water department, I pointed out its time to get rid of the employees who just add fluff. ( such as the employee who got the Mayor an award ) and get people that are productive.

    I questioned the fact the engineering department has been with out a manager for months, Wally did admit its been 8 months, I also questioned the department is basically leaderless, since they demoted the position of the engineer to a manager from director, it is very unlikely they are going to fill the position with anyone qualified. As I have stated here, the person running the trash collection efforts is not qualified to run the engineering department.

    On the issue of employees, misusing their health care by adding dependents, not allowed I ask the question if they were going to pay the city back, they stated yes,  but after the meeting and giving it so thought it appears these employees should have been all fired since it appears they stolen taxpayer money. 

    While I think Marty has done a good job in keeping the budget going, the problems here are large, and the Mayor and council keep adding to the mess rather than providing any real leadership.  I found it interesting the unions agreed to 2%, it does make me wonder if they understand better than us the mess the city is really in.

    Frankly Wally and Marty are not the problem, they are qualified for their jobs, its the council and Mayor who are not.

  5. Citizen participation was pathetic

    It is really no wonder why the city council has little hesitation to raise taxes and fees as they see fit.  As reported, there were only four (4) citizens who bothered to show up the the budget discussion.  We were far out numbered by city staff, who I felt provided a very complete picture of the city budget issues.  I very much hope there is no tax increase, and will voice my opinion on that matter as often as I can.  There is no good reason to raise taxes and fees in 2013.  The point is, I already do that, those in government know that is my opinion, and they know it is only one person's opinion.

    When the council looks out over the audience and sees the same three or four people saying the same things we always say, why should they worry about a backlash at the voting booth?   I have come to realize and even accept that the citizens of Evanston like to talk the talk, but can't find the energy to voice their opinion at the only place that really matters, in Council Chambers.  

    I may not agree with some of what the other two or three citizens had to say at the budget discussion, but I was proud to see they were there.  On the other hand, I was embarrased for the Evanston Community at such a pathetic attendance for a discussion about such critical issues.

    1. Mike your statement is true about the council

      A meeting or two ago, a council member told me, then are more likely to respond to an issue if citizens come to the meetings.  It sad, but true.  If no one saids any thing, then don't even bother to think about.

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