CHAMPAIGN — City officials are optimistic that next year’s tax levy will bring between $24 million and $26.1 million into the city’s coffers without raising tax rates.
City council members voted in favor of a proposal to set next year’s tax levy at 1.3152 percent, the same rate it has adopted for the past seven years.
Despite keeping tax rates the same, staff predict the city will see a $723,831 increase over last year’s levy, a 9.7 percent increase over the actual 2018 equalized assessed value of all homes.
And the value of homes in Champaign is increasing: City staff said in a report that there was a 3 percent rise in the EAV over 2018, with an estimated 1.87 billion predicted for 2020.
Mayor Deb Feinen said people may still see their tax bill go up because as home values increase, effective tax bills can increase, too.
“The key is we keep the rate the same, but it doesn’t mean the level of taxes you pay will be the same,” Feinen said. “If your house is worth more when the rate is applied to the assessed value of your house, then you’ll pay a little more.”
Staff are recommending that the extra money go toward keeping pension obligations well-funded.
The police pension levy, for example, is funded at $7.1 million — more than twice the minimum level of $3.4 million required by the state. Firefighter pensions are being funded at $4.5 million, or about 41.2 percent over the state minimum.
In a memo, staff said the funding strategy for pensions is “more aggressive” than the state’s, which they say is “not consistent with best practices and is significantly lower than the proposed funding level.”
Money levied for capital improvements is set to increase by 2.9 percent over 2018, and the city’s portion of library funding will go up by 3 percent following the overall increase in the EAV.
But the general fund will see another hit like in 2018. The city expects that account will see about $692,000 from next year’s levy, a 39.1 percent decrease.
Staff note that due to the 7 percent and 11.5 percent increases to police and fire pension obligations, respectively — as well as the other levy increases — “there is insufficient funding remaining from the overall levy to increase the general fund levy by the rate of increase,” which is 3 percent.
Feinen said the city likes to keep the tax rate consistent.
“We’ve kept our rate flat since 2013, and I think the importance of that is that people can rely on that and budget accordingly,” Feinen said. “We don’t control the other taxing bodies, though. The tax bill is a conglomeration of all the taxing bodies, and the city is a fairly small portion of the larger tax. But from the city, you won’t see a rise in the rate.”