City to vote on 10.87% levy hike

Telling city alderman that municipalities across the nation are faced with racing their tax levies, Vandalia’s auditor gave the city council three options for an increase.
Aldermen chose the middle of those options, with two of them speaking out against a tax increase.
All three levy options presented by Dale Timmerman of Timmerman and Co. Ltd. have all levies except the one for the city’s police pension fund staying at the last year’s levels.
While the police pension fund levy in the 2017 levy was $294,773, the three options for that fund in the new levy, as presented by Timmerman, are:
A) $503,287, an increase of 26.84 percent.
B) $379,216, an increased of 10.87 percent.
C) $325,854, an increase of 4 percent, assuming a contribution of $53,362 from the general fund, as was done last year.
Ultimately, the council voted to ask Timmerman to prepare a tax levy with option B, to be voted on at the council’s Dec. 17 meeting. Because the proposed new levy of $861,211 is more than 5 percent above last year’s generated amount, the council will hold a Truth in Taxation hearing prior to that Dec. 17 meeting, at 6:30 p.m.
The measure passed in a 5-2 vote, with aldermen Mike Hobler, Andy Lester, Russ Stunkel, Dorothy Crawford and B. John Clark voting for it, and Joel Rebbe and Steve Barker voting against it.
Several times throughout Monday’s meeting, both Timmermann and Mayor Rick Gottman emphasized that Vandalia’s situation is not unlike that in in other communities.
“Every single pension fund in this country has got the same issue going on,” Timmermann said.
“What’s driven it, frankly, is that actuaries all across the country have been assuming a rate of return that was above what the funds were actually getting,” he said.
“About three or four years ago, they decided they couldn’t kick the can down the road anymore, and they changed the rate of return assumptions and that jumped up everything by a bunch.
“Every town, just like Vandalia, in Illinois, every one of them, has their pension funds underfunded,” Timmermann said.
He told aldermen that for someone with a $3,000 tax bill would see the city tax bill increases under each of the three options: A) $117; B) $7; and C) 17.
The overall increase in a tax bill would be: A) 3.91 percent B) 1.58 percent; and C) .58 percent.
Clark, the alderman who proposed putting the sales tax increase on the ballot, said that in talking to residents, “The biggest reason I heard (it failed) was because of the police pension fund.”
The city proposed that half of the new revenues from a sales tax increase would go to the pension fund and half to the infrastructure projects.
“Frankly,” Timmermann said, “my personal read is, any tax increase that you’re going to propose to anybody, it’s going to be voted down.”
If the sales tax increase would have passed, he said, “I would still be telling you the very same thing. You would simply have more revenues in that you could subsidizemore from the general fund if you chose to.”
About the pension fund issue, Timmermann said, “You have a commitment to the police officers to provide a pension at a certain level. If you don’t put that money aside, they’re not going to have a pension.”
Rebbe asked whether the city could contribute more to the pension fund, to resolve the issue one time, Timmerman said that the city has the ability to contribute up to the maximum amount, $503,287, and that’s something to look at.
“You scoff at that, but that’s truly what you really need to be providing adequate funding for that. Eventually, you guys will have to quit kicking the can down the road, too, and look what at the actuary (of the pension plan) is saying, instead of what the (state) Department of Insurance is saying.
“And this is not the first time I’ve told you those things, either,” Timmermann said.
Crawford said, “I’m just going to say it would be really nice knowing we had the $500,000 and not have to raise property taxes.”
Rebbe asked whether the city could just use money from the general fund instead of having any increase. Crawford said, “Well, yeah, we can, but we’d be taking money from the general fund that we may need for something else.”
“It’s a chance to take, in my opinion,” Rebbe said, “so we don’t have to continue to raise taxes.”
Crawford said that in passing the levy last year, the council agreed to subsidize its share with money from the general fund and that “it was not something we could make a habit of. It was a one-time thing, so we could give everybody relief because we had the chance to do it.
“If we keep dragging money out of the general fund that we might need for other things, we’re going to end up right where the county is and we’re going to go broke, all for the lack of people authorizing a penny on every $4,” she said.
If you take money from the general fund, Timmermann said, “you are going to have to replace it from some place or you’re not going to do some projects.”
Still, Rebbe proposed supporting money from the general fund.
“This city has enough money to pay for these things without having to raise taxes every single year,” he said.
Crawford said, “And we’re going to raise the water bill and then we’re going to have to raise the water bill again, and then we’re going to have to raise taxes again.
“They (residents) left us with no choice – we gave them an option, and they said no … in overwhelming numbers,” she said.
Stunkel asked LaTisha Paslay, the city administrator and city treasurer, how the city’s finances look.
Paslay said that state revenues had stayed stagnant the past couple of years and that she projects revenues to “stay pretty much flat.
“If you start taking money out of the general fund, you’re probably going to have to start cutting services and, I hate to say it, but, possibly, staff.
Gottman said that the city has grant commitments, equipment purchases and other financial obligations. Taking away general funds, he said, “that all comes to a halt.”
Timmermann added, “You may have to subsidize out of the general fund for the water plant.”
“I guarantee we will have to,” Gottman said.