Former Mayor Belsky opposes City 7.3% Property Tax Increase

Mayor Michael D. Belsky
Mayor Michael D. Belsky

City 7.3% Tax Increase Unnecessary and Contrary to Fiscal policies

The City of Highland Park is proposing a 7.3% property tax increase in connection with its 2014 budget. The purpose is to fund a $1.1 mm payment to fund police and fire pensions and $365k in capital improvements for the library.  While both are worthwhile and responsible the property tax increase is not needed. Further this proposal is contrary to stated fiscal policies that have been in place for the last decade.

At the end of fiscal year 2013 the City had a General Fund balance amounting to $19mm, (with approximately $14mm unassigned). This represents 67% of General Fund expenditures (at approximately $28mm).  While serving as Mayor the Council established fiscal policies with respect to the use of fund balance.  These included the following: fiscal stabilization (i.e. when revenues are down or expenditures increase unexpectedly fund balance can be used to balance the budget- this happened in 2008 when revenues dropped 10% due to the Great Recession; one time capital expenditures; and pre-payment of pension liabilities.

Another policy that was put into place was to maintain a General Fund balance ranging from 25% to 33% of expenditures.  The Government Finance Officers Association considers 10% to be a best practice. Highland Park’s higher standard of 25% to 33% is what enables a Aaa bond rating from Moody’s. Based on the 2013 General Fund budget 25% would be $7.0mm and 33% would amount to $9.0mm. Even at the 33% level this leaves approximately $10mm in excess fund balance, more than enough to avoid the 7.3% property tax increase.

Another flaw in this proposal is using the tax levy to fund library improvements. The use of fund balance for this purpose makes sense in that $365k in improvements may not be recurring. Providing a tax levy for this purpose establishes a recurring source of revenue as it may become an expectation of the Library Board going forward.

It was recently reported by the press that 5 businesses closed in October and that Highland Park’s vacancy rate is 10%, double that of Lake Forest.  A 7.3% tax increase will likely be passed on the businesses by landlords. This will lead to more vacancies in our downtown. Property values and employment are still not at pre- 2008 levels. Imposing a 7.3% tax increase will impose an additional hardship on residents and homeowners.

The fiscal policies mentioned above were put into place for a reason. The excess general fund balance represents taxpayer dollars. I urge the Council to adhere to these policies and give taxpayers and businesses the relief they deserve.

One clarification for the public is that the press reported that the Police and Fire pension funds are funded at 40 to 50%, similar to that of the state. This is inaccurate in that the City issued pension funding bonds several years ago. The proceeds are invested in the pension fund with the idea that debt service is lower than the return generated by investment earnings on the pension fund. This has been the case. Taking this into account the City’s pensions are funded in excess of 70%.

Michael D. Belsky(Mayor of Highland Park 2003-2011)

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Steven N December 02, 2013 at 03:57 PM
Thanks for the cogent analysis. I support your position.
Don Quixote December 02, 2013 at 09:56 PM
He's still got it. Gaaaak
Michael Ioffe December 03, 2013 at 09:58 AM
In my opinion, only attraction of new customers from Great Chicago, tourists from USA and the world could easy solve economical problems in Highland Park. It must be a priority for City official, owners of businesses as all residents. Sites about Highland Park must look like at least as sites of Victoria (isle Vancouver). We must create good public transportation between train stations in Highland Park, Deerfield, Buffalo Groove, etc. We must connect by public transportation Fort Sheridan, all beaches with center of Highland Park the same as we have it with Ravinia music, Botanic Garden, train to Chicago. We must exploit in advertisement the best location of Highland Park (close to Chicago, Ravinia, Botanic Garden) to people of Great Chicago, USA, and the world. We could create company for investment in tourism in Highland Park to build more Inns, Hotels, Motels. It could bring more profit, than investment in developing countries.
Daniel December 03, 2013 at 01:38 PM
Hey Mike: Now that your a private citizen how about investing in the crumbling movie theater you purchased with taxpayer money. Great idea.
Don Quixote December 03, 2013 at 03:02 PM
Daniel -> It's not as if the theater was purchased without the help of the council, which included the current Mayor, who voted for it, then refuted the decision publically. Not to say this is a direct impact of the absence of a functional theater, but the commercial vacancy surrounding the former theater suggests that it did carry an economic weight, and that some action should be taken to revitalize the area. Maybe if the current council was more proactive about such an initiative, as the asset is in their hands, things would be different. Lastly, the theater was purchased through a TIF, not long term taxation of the whole City, as the current plan suggests. Far more prudent.
Daniel December 03, 2013 at 03:07 PM
I'm pretty sure that Nancy was not on the council when the theater was purchased. Whether they used cash is irrelevant, its taxpayers dollars that could have been used for something else, like avoiding tax increases. Economic development is a good thing and is best achieved by a friendly business environment like lower taxes and good city services m which is not the situation in HP.
Don Quixote December 03, 2013 at 03:15 PM
"lower taxes"... like the opposite of a 7.3% property tax increase?
Don Quixote December 03, 2013 at 03:18 PM
and by "the situation in HP" you mean the current situation? As in, the one in which Mike Belsky isn't Mayor?
Daniel December 03, 2013 at 03:32 PM
I am not a fan of either mayor. In my opinion they both did bad jobs.
Michael Ioffe December 03, 2013 at 03:41 PM
We have huge problems with science of economy and science of climate change, which are responsible for most economical problems in the world, USA, and Highland Park. Our economists are using advice to government stimulus, austerity, less (more) taxes, which worked good enough when most of producers and consumers lived in one country. Right now all these recommendations are useless and help create more jobs in developing countries, where workforces are ten times cheaper. Robots only create more problems with jobs in rich country, as USA still is. Obama administration, Democrats, Republicans in Senate and Congress, official of all states and cities must understand huge problems with science of economy. We must find directions for new jobs, which will never go to developing countries, despite globalization of today level. City of Highland Park, first of all must find directions for better developing of Highland Park businesses. Possibilities of new jobs, new customers for local businesses are more important than stupid advices from outdated schools of economy (Keynesian, Austrian). As today, as previous Mayors are solving problems by outdated recipes.
Bill Bommarito December 03, 2013 at 07:38 PM
Very well written, informative and encouraging. I hope the current law makers will consider their predecessors points. Especially the concept of relief. And why a tax LEVY for property improvements at the library? Good Job, Belsky!
Dan Cox December 03, 2013 at 07:51 PM
Shopping on-line, rather than shopping local stores, hurts everyone. A mayor and city council that passes an AssaultWeopons Ban Ordinance that violates the Constitution and Il. State Law is also going to create a boycott by all of the people who are residents of nearby towns, that are firearm owners or that simply do not accept violations of our Constitutional Rights. Highland Park is in a death spiral and it will go only further into the hole, the more it violates peoples Constitutional Rights. Currently, the NRA, ISRA, Second Amendment Foundation and Concealcarry.com have all reported on the recent violation of gun owners rights by the Highland Park Mayor and City Council. Tens of thousands Illinois residents will no longer do business in Highland Park. Simply put... if this AWB was really a good idea, then why didn't Lake Forest, Lake Bluff, Northbrook , Deerfield or many of the surrounding communities join in the adoption of such an ordinance?
Walter White December 03, 2013 at 07:52 PM
I'd take either HP mayor over Harriet any day of the week and twice on Sunday. Harriet and her clueless clan are destroying the Village.
Dan Cox December 03, 2013 at 07:56 PM
Deerfield Mayor and City Council were inteligent enough to only Pass a "safe storage / safe transportation ordinance and respect the Constitutional Rights of their citizens. It helps when the Veterans of the VFW are right across the street from the village hall.
Walter White December 03, 2013 at 08:21 PM
Yeah but they're pretty bad on the 500 other issues that affect the Village, which of course you would know nothing about. Move along.
Dan Cox December 03, 2013 at 08:30 PM
I enjoy the new library and Community Development Dept. folks are great to work with, very nice people. Sometimes we have lunch at Dear Franks and have a Beef & Sausage combo w/ sweet peppers and cheese, Dam'n, now I have made myself hungry again!
Dan Cox December 07, 2013 at 07:23 PM
The real question is... are you going to run against Mayor Rotering? If so...are you going to repeal the AWB if elected?
forest barbieri December 08, 2013 at 06:57 PM
Excellent overview! It seems the crises is over and the taxing entities are hungry! What can we spend, spend and spend?


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