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Smyrna Council delays property tax decision
Debate over how much to increase taxes to pay for police station, public works building, and electric substation

By Seth Clevenger
Staff writer

Those of you who were holding your breath in anticipation of Smyrna’s new property tax rate can go ahead and exhale, at least for a couple more weeks.

At its April 17 meeting, Smyrna Town Council unanimously voted to table the tax issue until its next meeting on May 1.

This delay means that the two new members of Council that residents elect in the Smyrna municipal election on April 24 will be able to vote on the issue when the new tax rate is set.

Town Manager Dave Hugg said that if Council does not set the tax rate on May 1, it could cause complications for both the town and for taxpayers because the town sends out its property tax bills in the first week of May.

After the meeting, Councilman Douglas Chervenak said the delay will give two new minds – the newly-elected members of Council – the opportunity to provide input. The decision to table setting the tax rate also gives Council more time to consider the issue, he said.

Vice Mayor Bill Hill said he was leaning towards approving an extra five cents on the tax in order to make the town’s general fund self-sufficient, while putting the other proposed town projects on hold.

He said the maximum proposed rate would be too much, given the increase in the cost of electricity and fuel.

“People are really being hit hard by everything right now,” Hill said. “I’m not sure that they can afford it.”

Hill and Councilman Rick Burritt will no longer be members of Council when the vote is taken on May 1.

At its March 20 meeting, Council announced a maximum proposed property tax rate of 39.04 cents per $100 of assessed value under the new assessment.

Under the old assessment, Town of Smyrna property taxes were set at 31 cents per $100 of assessed value. But with the recent reassessment, the tax rate would automatically go down to the rollback rate of 17.26 cents without any actions by Council.

The maximum proposed rate would be enough to finance for several major town projects: a new police station, a new public works building, renovations in the downtown area, financing the electric substation and making the town’s general fund self-sufficient.

On May 1, Council can choose to put all the town projects aside and leave the tax at the rollback rate, increase the tax to the maximum to fund all of the proposed projects, or fund only some of the projects and leave the tax rate somewhere in between.

More topics from this Council meeting will be reported in next week’s Sun-Times.

Property tax hike considered
Smyrna Council to debate using property taxes to fund projects like new police station

By Seth Clevenger
Staff writer

Smyrna Town Council started the process of setting – and potentially raising – the town property tax rate at the March 20 Council meeting.

Council approved a motion to publish notices stating that the Town is considering an increase in property taxes. The proposal calls for raising the new rate after the reassessment by up to a maximum of 126 percent. The motion to publish the notices passed by a 5-2 vote, with Mayor Mark Schaeffer and Councilman Bill Pressley voting against it.

This vote did not actually change the tax rate; it only announced Council’s intention of setting a new rate. Council will vote on the issue at its April 17 meeting.

By law, Council must provide 15 days’ notice before changing the tax rate.

Town Manager Dave Hugg said that raising the tax to the maximum proposed rate of 39.04 cents per $100 of assessed value would be enough to pay for several planned projects for the town, including a new police station and public works building.

He said that on April 17, Council can choose to put all the town projects aside and leave the property tax at the rollback rate (the new rate after the reassessment), increase the tax to the maximum to fund all of the proposed projects, or fund only some of the projects and leave the tax somewhere in between.

What could a tax increase fund?
After the meeting, Hugg said that a tax increase could be used to fund a new police station, which would cost $4 million. He said the current plan for the police station is a scaled back version of the original concept that would have cost between $5.5 and $6 million.

Another possible town project is providing a new building for the public works and electric departments for $2.5 million. Hugg said the current public works building was built around 1930 and that an engineer had declared it “structurally unsafe.”

Council could also choose to use taxes for a $4.7 million loan to finance the new electric substation, Hugg said.

He said that the Town could use about $2 million to renovate the sewer, water and streets in downtown Smyrna.

Yet another option could be to use the property tax to make the Town’s general fund self-sufficient. Hugg said the general fund, which includes all Town departments except the water, sewer and electric utilities, currently relies on profits from the utilities to make up for its losses.

If the general fund was covered by the property taxes, utility profits could then be freed up for other town expenses. Alternatively, Council could reduce electric rates, Hugg said. He said that using property taxes to cover the general fund would require a 5.86 cent increase in the tax.

The maximum proposed rate of 39.04 cents would fund all of these projects, Hugg said.

It will be up to Council to decide how many of these projects should be financed through the property tax.

During the meeting, Councilman Pat Cahill said Council should keep in mind that residents have already been hit with increases in electric bills and gas prices.

“I think we should be very careful and conservative about any of these projects we don’t absolutely have to do at this time,” he said.

Schaeffer said he wanted more input before taking a stance on the issue.

“I would like to wait until I hear public comments before I express an opinion,” he said.

Councilman Douglas Chervenak also wanted to gather opinions from the public to aid his decision about where to set the tax.

“It’s what we hear from the community,” he said.

How much would taxes go up?
Here’s how property taxes in Smyrna would be affected by the proposed rate increase:

Under the old assessment, Town of Smyrna property taxes were set at 31 cents per $100 of assessed value.

But with the recent reassessment, the tax rate would automatically go down to 17.26 cents without any actions by Council because the assessment itself is revenue neutral. Although the new assessment may change taxes for individual properties, it cannot, by law, alter the total amount that the town brings in through property taxes.

The rollback rate of 17.26 cents is lower than the old rate of 31 cents because the total assessed value of the town went up due to the new assessment, while the total amount of tax collected by the Town remained the same. Hugg said the reassessment increased the total assessed value of the town from $331.1 million to $587.6 million, a 77.5 percent increase.

If raised all the way to the maximum proposed rate of 39.04 cents, the Smyrna property tax would increase by about 126 percent over the rollback rate.

But the actual change in a resident’s property taxes would depend on how much the assessed value of the property changed.

Here’s an example for a home that was valued at $120,000 under the old assessment and assessed at $200,000 in the recent reassessment:

If Council approves the maximum new rate of 39.04 cents, the property tax would jump from $372 under the old assessment and old rate to $780 under the new assessment and the maximum new rate. Using this example, the proposed rate hike would mean a $34 increase on monthly mortgage payments.

If Council chooses to leave the property tax at the rollback rate, the property tax would actually go down from $372 to $345 for the assessed values used in the example.

Calculate your property tax rate
To find out exactly how the rollback rate and the maximum proposed tax rate would affect your annual property taxes, plug the old and new assessed values for your property into the following equations:

Current tax rate = current assessed value (under old assessment) x 0.0031

Rollback tax rate = new assessed value (under new assessment) x 0.001726

Maximum proposed tax rate = new assessed value (under new assessment) x 0.003904

ISSUE DATE 03/22/06

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