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Property tax hike could top 10 percent

City Manager Julia Carroll this evening laid out a range of possible property tax hikes — from 5.6 to 13 percent — to Evanston aldermen, who didn’t seem very happy with any of them.

Mayor Lorraine Morton said there should be no increase in taxes.

“We are losing people in our city,” the mayor said, “I don’t want people saying Evanston is no longer diverse because the tax rates are forcing people to move out.”

Alderman Edmund Moran, 6th Ward, said the lowest number the manager suggested was as high as he’d go. “I can’t imagine voting positively on a budget that called for a tax increase in excess of that,” he said. Even at that level, he added, “I think people will be very unhappy about it.”

Alderman Elizabeth Tisdahl, 7th Ward, said she agreed that the higher increases were “out of the question.”

Alderman Melissa Wynne, 3rd Ward, said she might consider an increase in the 9 to 10 percent range.

Other aldermen avoided offering a sense of how big a tax hike they’d consider, while pressing the city manager about possible ways to trim the budget gap.

This year’s city budget raises the property tax levy 2.9 percent.

Ms. Carroll says the city must boost its fire and police pension fund contributions next year by nearly $2 million because the state legislature has increased retirement benefits for public safety employees and the investment returns on the funds have failed to meet projections.

In addition, she said, other expenses, including health insurance and utility costs, are rising faster than revenue from fees and other non-property tax sources.

With no tax increase, Ms. Carroll said, the city might have to lay off 38 employees, about 5 percent of its work force. A 13 percent boost would avoid all layoffs and maintain services at current levels.

The aldermen gave preliminary approval to two proposals that could help reduce the funding gap:

  • A possible early retirement incentive program would let employees boost their pension benefits, splitting the added cost with the city. Preliminary staff estimates are that the program could lead to the retirement of 35 employees, about a third of those who’d be eligible. Only about 5 of those positions would not be refilled, but most of the replacement workers would be paid less, so the program is forecast to be at least revenue neutral while making it easier to reorganized departments to increase efficiency.
  • A new pharmacy benefit plan from WellNet HealthCare is projected to save about $300,000 by reducing administrative fees while providing the same coverage to city workers.

The city manager has also identified two other possible ways to save money next year:

  • Reducing clinical health programs could save up to $600,000. The city is negotiating to have the two major hospitals pick up some of those health department programs, but Ms. Carroll said it’s not clear yet how much savings will be achieved there.
  • Several measures to increase efficiency in the sanitation department should save nearly $300,000.

The manager also suggested speeding up a planned shift from small bins to 95 gallon carts for recycling could lead to a large enough reduction in landfill fees to quickly recover the cost of the changeover.

Those cost reduction steps make it appear unlikely that the worst-case-scenario tax hike will actually come to pass, but the council is a long way from the mayor’s goal of no tax increase for next year.

The city manager is scheduled to submit a proposed budget in December and the council is expected to approve a final budget before the start of the new fiscal year March 1.

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