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Property-tax-less towns not ready to follow Schaumburg's lead
By Eric Peterson and Marco Santana | Daily Herald Staff

Gurnee scrapped its property tax when its retail base grew big enough to support the town with sales tax revenue.


Paul Valade | Staff Photographer

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Published: 11/23/2009 12:04 AM

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Citing the problems of being heavily dependent on consumer spending in a recession, Schaumburg is poised to impose its first municipal property tax in its 53-year history.

Though the village will likely leave the relatively exclusive ranks of property tax-free Chicago suburbs, others in that club don't appear near ready to take a similar leap, despite similar financial strains.

From Carol Stream to Oak Brook, to Gurnee, Vernon Hills, Campton Hills and Lily Lake, officials are facing the challenge of sustaining services as revenues drop, but so far have been able to weather the current economic storm without resorting to the property tax.

Carol Stream hasn't levied a property tax in its 50 years, either. Village Manager Joe Breinig said leaders have talked about it but it's never been taken to a serious level.

"The board has said routinely that it's a last resort," he said. "It's one of the very last things that would ever be done. Our economy is no different from Schaumburg or the rest of the world. It's off. Across the board, every major revenue source is in decline."

In recent years, Carol Stream has cut spending in several areas, including keeping retirees' jobs unfilled, to address declining revenue and avoid a property tax.

"We've tried to do everything we can (to avoid it)," Breinig said. "We're not anticipating a property tax. There's no active plan for a property tax."

Village President Frank Saverino said he doubted Carol Stream would see a property tax in the next two years. With six months of reserves stashed away, he said the village feels as comfortable with its situation as can be expected.

Still, he said any measure taken would stop short of cutting civil services or laying off police or fire personnel.

"We cannot let the internal city crumble because I'm worried about a property tax," he said.

That was exactly the sentiment Schaumburg officials expressed, only they reached the painful dilemma sooner.

In 2006, the village still had $25 million in reserves to draw on, enough to cover about four months of operations.

Reserves have gotten Schaumburg through tough times before. But this downturn has proved too long and too deep for the reserves to go the distance, Village Manager Ken Fritz said.

The village has tightened its belt over the past six years, eliminating 136 full- and part-time jobs and recently freezing nonunion wages. Still, it will run out of money in less than a year if no action is taken, Fritz said, and further cuts will affect essential services.

"We're not in a position to wait," he added.

Like Carol Stream, Oak Brook has about six months of operating funds in reserves. Village Manager David Niemeyer said it can cope for now - despite projections of another 5 percent dip in sales tax revenues next year - by reducing expenses and outsourcing some services.

Last summer, Oak Brook cut costs by $1.3 million, mostly by eliminating about 15 full-time jobs. The village also cut staff at the public library it runs.

In contrast to most nontax towns, Gurnee began with a property tax but ended it by building up its retail base in a boom economy thanks mainly to Gurnee Mills mall. The village is now working hard to prevent a reversal of that.

Mayor Kristina Kovarik said she believes the village's funding for core services will continue to come mainly from sales taxes and the state.

"We know we're going to have to make some ugly choices," Kovarik said. "Property tax is not on my radar."

Vernon Hills, too, has managed without a local property tax because of a vast commercial base that includes Westfield Hawthorn mall.

But with revenues nearly $1.5 million less than projected, village leaders have been scrambling to close a big gap. They've succeeded so far by cutting overtime, purchases, postage and various other costs as well as authorizing an accelerated retirement package for employees.

Mayor Roger Byrne hopes such measures keep a property tax out of Vernon Hills for the foreseeable future.

"We certainly don't want to impose it," he said. "We're trying to do it within our existing means."

Vernon Hills has other options it'd likely consider first, like resurrecting a natural gas tax or establishing itself as a home rule community for greater authority to increase its sales tax. Schaumburg raised its sales tax in 2004.

Campton Hills, on the other hand, is more easily surviving without a property tax because, being incorporated in 2007, it's never known better times.

"We've had to operate on a shoestring all along," Village President Patsy Smith said.

Also, residents have never become used to a high level of village services, relying, for instance, on private wells and septic systems.

Lily Lake Village President Jesse Heffernan said her town, still under 20 years old, has felt a strong effect from the economy but still plans to make do without a property tax.

Like Campton Hills, Lily Lake has gotten by with a relatively low level of municipal services, funded mainly by motor fuel taxes, the local cut of the state income tax and special-service taxing areas for individual neighborhoods.

• Staff writers Mick Zawislak and Bob Susnjara contributed to this report.