Normal Town Council approves increase in property tax levy
The Town Council voted unanimously for a tax levy increase, which is expected to result in higher property taxes in 2018.
The Normal Town Council approved a measure Dec. 4 to raise the city’s property tax levy to $13 million, which is expected to amount to an estimated 5.9 percent hike in Normal residents’ property taxes next year.
The owner of a $165,000 home in Normal would pay $816 to Normal in 2018, an increase of $40, according to the Pantagraph.
The Normal Town Council voted unanimously in favor of the levy increase. As is increasingly the case throughout the state, the purpose of the Normal tax hike is to pay for the rising costs of local police and fire pensions.
Increasing property tax bills are nothing new for Normal residents. Property taxes have been going up in the central Illinois city annually since 2006.
And unfortunately, it’s not likely this new money will solve the underlying problem.
Despite increases in funding, Normal’s fire and police pension funds are actually worse off currently then they were five years ago. From 2012 to 2016, taxpayer contributions to the Normal police pension fund increased by nearly 30 percent, and over the same period, taxpayer contributions to the Normal fire pension fund increased by nearly 17 percent.
But in 2016, Normal’s police pension fund was only 52 percent funded, even though it was 55 percent funded in 2012.
The Normal fire pension fund is little better. In 2016, the fire pension fund was only 56 percent funded, while in 2012 it was 57 percent funded.
Had either fund been in the private sector, it would’ve been declared bankrupt years ago.
This persistent problem underscores the need for state lawmakers to protect homeowners from skyrocketing property tax bills. Passing a property tax freeze on homeowners’ actual bills (not just the levies of local governments), and requiring voter approval for property tax hikes are two powerful reforms that would go a long way for families struggling to pay higher property taxes as their own incomes stagnate.
Normal residents are right to be angry at rising local pension costs. It’s a growing problem across the state. Local pension debt in Illinois rose to nearly $57 billion in 2016, up from $38 billion in 2010.
One fix for municipalities such as Normal going forward would be to institute 401(k)-style plans for new workers. They could be modeled on the 401(k)-style option for state university workers. The plan has been operating for nearly two decades, and more than 20,000 university workers have opted out of the traditional pension plan in favor of the 401(k)-style plan.
However, this could not be done by Normal alone. Currently, the state does not allow municipalities to offer 401(k)-style plans to municipal police and professional fire departments. Illinois law mandates municipalities set up traditional police and fire pension funds. And because of the Illinois Constitution’s pension protection clause, once a pension is promised, taxpayers are on the hook for that money in perpetuity.
As long as the state refuses to offer homeowners any real property tax protection, and fails to empower cities like Normal to truly reform their own pensions, Normal residents should expect more tax hikes.
Correction: An earlier version of this story claimed incorrectly that Normal’s property tax hike totaled $13 million, when in fact that is the amount of the property tax levy.