Evanston aldermen Thursday night appointed four of their own to a special committee to look for ways to squeeze more city revenue from non-profit organizations.

The decision came after the aldermen, meeting as the Rules Committee, failed to reach agreement on which of several possible tax-substitution strategies to pursue as they try to avoid having to cut city services.

One plan the committee seems likely to study closely, since all its members indicated some support for it, is to establish a separate fee for fire protection service — removing that cost from the property tax levy.

The city now spend about $12 million annually on fire services, about 13 percent of its $93 million general fund budget, plus $5 million more on firefighter pensions.

“The reality is non-profits are sucking our blood,” Alderman Steve Bernstein, 4th Ward, said. “They’re benefiting from the service and not paying for it.”

How much benefit to taxpayers?

City planning division figures show that 44.5 percent of the land in Evanston is tax exempt, while 55.5 percent is taxable.

But only 10.5 percent of land in town is owned by tax-exempt institutions. (Streets and alleys take up 25 percent and parks and open space make up the other 9 percent.)

So, assuming the fire service fee was based on land area, non-profit institutions might end up picking up about 16 percent of the total fire service bill.

Formula: (Institutional land) / (taxable land + institutional land) = (institutional %).

The concept is much the same as the shift the city made years ago from charging for water and sewer service on the property tax bill to charging a separate fee for it.

But it also carries the same limitation.

Property taxes are deductible on state and federal income tax returns to homeowners who itemize their deductions.

For high-income taxpayers that can mean the effective cost of a $10,000 property tax bill is reduced by 30 percent or more once income tax deductions are figured in.

But the water and sewer fee is not deductible, and the fire service fee probably wouldn’t be deductible either.

So, in return for having institutions pick up 16 percent of the fire service cost, higher-income taxpayers could lose a tax deduction that saves them roughly twice as much.

A key issue for the committee — composed of aldermen Lionel Jean-Baptiste, Ann Rainey, Elizabeth Tisdahl and Bernstein —  will be to try to come up with a fee formula that leads to a more favorable result.

Bill Smith is the editor and publisher of Evanston Now.

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4 Comments

  1. Stop using non-profits as a scapegoat
    Evanston property tax rates are well above neighboring Chicago’s, Wilmette’s and Skokie’s. Instead of looking closer at spending (Evanston spends significantly more per capita than neighboring communities and has a lot more top level employees), politicians prefer to scapegoat Northwestern. Why does Evanston have such a bad relationship with its hometown college? Why do other cities throughout the state treat their colleges as economic magnets, increasing property values, contributing sales tax revenue, and pumping money into local business? Towns throughout the state even lobby Springfield to expand their hometown universities. Evanston, however, prefers the scapegoat game. Instead of looking at the benefits, it looks the costs. And politicians would rather tream NU as the town scapegoat instead of correcting their irresponsible management.

    1. I beg to differ
      Actually, most towns do not care for the University’s. Why because the “sales” tax does not cover for the expanses to infrastructure and safety services. Ask Carbondale, DeKalb, Champaign, Peoria, Bloomington, or other municipalities with big universities if they like have the educational institutions. Evanston’s not scapegoating, they have the same grips that all of the communities have. A university generates more communty cost that money to pay for those costs.

  2. How much benefit to taxpayers?
    Granted, there is a negative benefit to a reduction in the deductible portion of what property owners pay to the City, but that reduction is mitigated by yet more factors for a high-income taxpayer.

    First, the fire protection charge would be a small portion of the overall tax bill. Second, many high and not-as-high income taxpayers are getting caught by the Alternative Minimum Tax, essentially reducing whatever benefit they get from deductions.

    Hopefully, a fire protection fee would be based on the value of the building and/or the cost of putting out a fire on it, not the land. Thus, I presume, the non-profit institutions would pay more than 16% of the cost.

  3. Lets not kid anyone – this will just be a tax increase!
    The council will not reduce -taxes – they will just add another fee on to the bills of all taxpayers -Remember the water increases over the years the council is now using them to pay off other bills – since almost no residents were at the last special council meeting – the public missed the fact the city is using the water bills to pay for capital costs non-related to water and sewerage.

    These council members have no interest in controling taxes – they are going to use the non-for profits as a means to increase taxes on all of us. Why do they just cut the services back to the non-profits? no likely.

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