Where do your property taxes go? (Hint: Increasingly toward pensions)
Both the Champaign and Urbana city councils are meeting tonight to take action on the property tax rates you'll be paying next year. Champaign could finalize its rate tonight, and in Urbana, the discussion is just beginning.
What's consistent between the two, and it's explained further in the links above, is that both city's rates are expected to rise a bit but the tax levies themselves will not change. What that means is that, for the vast majority of Champaign-Urbana homeowners, your property value dropped, but your city property tax bill did not. You might remember that the same thing happened the year before.
Your city property tax bill accounts for roughly 15 to 20 percent of the total bill, depending on where you live. For a $150,000 home in either city, you'll be paying somewhere in the ball park of $600 to the city if you live in your own home.
The numbers could still change a bit as the cities start to dive in to their budgeting process for the 2013/14 fiscal year, but they already have a rough idea of where that $600 will go. I've tried to break it down for you here.
Let's start with Champaign.
I'll let the chart here do most of the talking, but I will point out how big of a chunk of that money goes toward police, fire and municipal employee retirement benefits (IMRF stands for the Illinois Municipal Retirement Fund). The chunk of what you pay for those retirement benefits gets bigger every year.
The funding for fire pensions actually dropped off 5.5 percent this year, but that's an anomaly. Funding for police pensions rose 4 percent and 7.8 percent toward IMRF.
Now, remember that the cities are collecting the same tax levies, so the amount you pay in property taxes has not risen for the past two years. The same pool of money is increasingly being stretched to pay for employees' retirement benefits.
That means the city has to take money away from another area in this chart. That's why it's likely that the Champaign Public Library will see a $37,359 (0.5 percent) reduction in its budget this year. And the city's general fund, which pays for day-to-day operating expenses and employee wages (in other words, it pays mostly for city jobs) will drop $115,681.
That means the general fund suffers -- to the tune of nearly $300,000. That's a pretty hefty amount when municipal governments everywhere have already been cutting staff and services nearly to the bone in the midst of the economic recession.
Keep in mind that property taxes are not the only revenues for either city. Far from it, in fact. Each city depends largely on sales tax for revenue, and they also get a big chunk of your state income tax.
But property taxes are still a huge chunk of each city's budget. I hope this explanation gave you a little insight into what you're paying for.