On February 5th, 2018, the Village Board adopted and codified a self-imposed Home Rule Property Tax Cap and Bond Limitations Policy to formally place limitations on future property tax increases and future debt issued by the Village. This policy is to remain in place as long as the Village retains its status as a home rule unit of government.
Tax Increase Limitation
Prior to the 2004 home rule referendum, the Village Board approved Ordinance 04-04, setting a limitation on the annual property tax increase that the Village could levy. Generally speaking, the limitation mirrored the tax cap that non-home rule units of government are subject to. Under the tax cap, increases in property tax extensions are limited to the lesser of 5% or the national CPI plus additional increases for new construction and annexations as well as increases resulting from the expiration of a TIF District.
The new ordinance approved on February 5th, 2018 adopts this limitation as part of its Village Code to officially inform future Village Boards and administrations of this limitation. It also expounds upon this limitation to allow the Village to recapture uncollected increases for years when the Village levied less than the tax cap.
Under home rule status, the Village has the authority to issue debt without referendum or limitation. Since the adoption of home rule, the Village has used this authority for various public infrastructure and economic development projects that have positively transformed the Village and increased the EAV of the Village by 23% over the past three years.
Conversely, non-home rule communities must seek voter approval through referendum for the issuance of most debt. Furthermore, non-home rule communities are limited by State Statute with regards to the amount of total debt that can be issued. This amount is 8.625% of the Village’s equalized assessed valuation (EAV). The intent of the non-home rule debt limit is to avoid burdening property owners with debt backed by property taxes.
The new ordinance includes a requirement that the Village Board pledge revenues other than property taxes for any future debt issued beyond the 8.625% State Statute limitation. As such, this limitation generally mirrors the intent of the non-home rule debt limit by restricting the property tax burden related to the issuance of debt.