CHAMPAIGN — If their 6-3 vote holds up next month, city council members are poised to approve a higher property tax rate payable in 2013, although homeowners, on average, would not pay more than they paid this year.
Whether or not it's a tax raise depends on whom you're asking.
"By saying they're not paying more, it depends on what side of the argument you're looking at," said council member Deborah Frank Feinen, who on Tuesday was one of the three votes against levying the same dollar amount the city has approved for two years prior.
Council member Michael La Due, on the other hand, says this week's straw poll on the property tax levy is a matter of maintaining revenues to pay for city services that have already undergone deep cuts during the past several years.
"It's a question of trying to hold the line," La Due said. "It's a question of trying to stay the course."
City officials every year approve a property tax levy — the absolute dollar amount the city says it will collect — and not a tax rate, but they historically use the rate as a guide in setting the levy.
Council members this week said in a 6-3 vote that they wanted to adopt a tax levy identical to last year's, which means that most property owners will end up paying in 2013 roughly the same dollar amount they paid this year.
"This isn't a terribly tough decision for me to tell people you're going to pay about the same," said Mayor Don Gerard.
But because officials expect property values to drop about 1.5 percent, collecting the same dollar amount will force the tax rate up. Had they voted to maintain last year's tax rate, the levy would have dropped, and homeowners would have paid a bit less.
"Your assessed value has gone down," Feinen said. "If the rate goes up, you are paying more."
What is for sure is that the difference between raising the tax rate or lowering the tax levy — about $300,000 — could have a profound impact as city budgeters begin writing next year's spending plan.
"We need to pay as we go," said council member Tom Bruno. "It involves some sacrifice, and we need to just step up to the sacrifice."
Even though city council members are expected to collect the same amount of property tax dollars as they did last year, the amount available for the Champaign Public Library and the city's day-to-day expenses could still drop.
The property taxes that city officials are legally required to set aside to fund employees' pensions every year continues to rise, even though tax revenues do not.
Under the tentative plan supported by the city council on Tuesday, $10,040,869 of the $19,955,632 property tax levy would go toward pensions. That is $153,040 more than last year.
More property tax money for pensions leaves $115,681 less for the city's general fund — which pays for day-to-day city services — and $37,359 less for the Champaign Public Library.
Those numbers are based on the council-supported higher tax rate of $1.3287 per $100 of equalized assessed value. Had the council instead chosen to support a tax levy based on last year's tax rate, $1.3084, the city would expect to collect $304,000 less property tax revenue, leaving even less money available for non-pension purposes.
"If we vote for (the higher tax rate) we're taking money out of the hands of our residents," La Due said. "If you vote for (last year's tax rate), you might be taking books out of the hands of a child."
La Due also reminded city council members of last year's debates over cuts to staffing at the police front desk and the overtime budget for firefighters. Those were two of the most hotly contended in a series of budget cuts, and city council members even restored enough of the funding to minimize their effect on city services.
La Due warned that those expenses might have to be revisited should city council members move toward lowering the property tax levy to maintain last year's rate.
Feinen, who voted against the tax rate increase with Karen Foster and Will Kyles, said she realizes a lower tax levy would mean even more cuts on top of the $19 million in budget reductions officials have made during the past several years.
"I don't think we're spending it frivolously," she said.
But she also pointed out that the city's property tax bill only accounts for a portion of property owners' bills. When other taxing bodies, like the school and park districts, raise their levies, the money starts to add up.
"It becomes real dollars," Feinen said. "And I think we have a responsibility to the taxpayers to not do that."
Whether or not it's a tax raise is up for debate, but what most council members agreed on is that budgeting during an economic recession is not an ideal position.
Council member Paul Faraci said that, if it would mean more cuts to police and fire, the extra $5 or $10 annually homeowners would save with the lower tax levy is not a risk he is willing to take.
"I don't like any of (the options), I'll be honest," Faraci said. "But you start talking about the impact on our first responders, our fire and our police, and you get my attention."