With a $12 million budget surplus, Arlington Heights village leaders will offer a tax abatement to residents this year.
The Village Board voted 9-0 to approve plans for disbursement of $1.6 million of those funds to be used as a tax abatement to residents – an average of a $50 tax credit reflected on the second installment of 2022 tax bills for homeowners with a $375,000 home. The remaining funds will be used for shortfalls in police and fire pension funds, unfunded mandates and village infrastructure, officials explained.
“We’re in a very fortunate position,” Village Manager Randy Recklaus told the board. “The village has run a surplus the last couple of years and has been able to maintain a flat tax [with no increase in the village’s portion of the tax bill] the last four years.”
The larger surplus, he said, came from higher than expected revenue from the food and beverage tax, state income tax allocations, an economic upturn, and as a result of the state changing the way sales taxes are distributed.
“Property tax abatement is not something we’ve done before,” he said. “This is an actual temporary reduction in everyone’s property tax bill. The 2022 taxes you pay in 2023 will be reduced.”
According to Recklaus, village staff plan to use the remaining funds to allocate $2 million to the village’s fleet fund, $2 million to the firefighters pension fund, $2 million to the police pension fund, $3 million to lead service line replacements, $1.2 million to the water and sewer fund to increase the pace of water main replacement, $500,000 to the municipal parking fund and $100,000 to the capital projects fund.
Recklaus said staff also plan to recommend to the board in the coming months the elimination of vehicle stickers and dog tags starting in 2024, saving residents an additional $72 annually while freeing up village staff to provide other services.
Mayor Tom Hayes said this was the first time in his 32 years on the board there was a tax abatement to residents.
“We very much appreciate your leadership and guidance and direction and efficiencies to make this happen. This doesn’t happen by accident, it happens with good financial management,” he said about village staff.
Trustee John Scaletta, who is not seeking another term in the April 4 election, said this was the largest surplus ever, and when he looks back, the fiscal year 2022 budget was created in 2021 during the COVID-19 pandemic — when much of the area was shut down. So, he said, village planners were very conservative on village income numbers.
However, Scaletta asked village Finance Director Tom Kuehne why more of the surplus wasn’t used to abate property taxes.
“What’s important to remember, we’re in uncertain economic times right now and will be in next few years,” Kuehne said. “We looked at where we are now and looked at where we are five years from now. A lot of these transfers [to other village funds] go to smooth out property tax this year and future years.”
He said the additional money will pay down the village’s unfunded liability and actually lowers taxes in the future.
“The $4 million total amount going to the pensions will save us $9.8 million from now through 2040 in amortization that actuaries use,” Kuehne explained. “The general fund pays the fleet fund and we’ve had an increase of 15% in the cost of public safety vehicles. The money has to come from somewhere. We’re setting up the fleet fund for the future so we don’t have to hit the general fund so hard and raise taxes that much more in the future.”
Scaletta said leaders are “investing in this village’s future.”
Elizabeth Owens-Schiele is a freelancer.