The and took the topic of home rule to the public for the first time Wednesday night at during a community meeting that featured a presentation from village staff and a question-and-answer session from attendees.
Village manager Randy Recklaus, finance director Peg Hartnett, and management analyst Christina Burns presented the what, why, and how of home rule in Clarendon Hills.
For those who missed the meeting, here’s what was presented by the village staffers.
What is home rule?
According to Burns, home rule is automatic for municipalities that have populations exceeding 25,000, and can be attained via referendum by communities like Clarendon Hills with populations under 25,000.
Currently, Burns said, 205 municipalities in Illinois have home rule, 108 of which attained it via referendum. Those municipalities who attain home rule via referendum can only revoke it with another referendum. In the more than 40 years since home rule was created, there have been 29 referenda to rescind home rule, and only four were successful.
The earliest opportunity for Clarendon Hills to vote on a home-rule referendum would be March 2012, on the presidential primary ballot.
Burns said home rule allows a municipality to exercise powers not automatically granted to local governments by the state government. Home rule communities are not subject to property tax caps, can modify their business licensing policies, have more flexibility in establishing intergovernmental agreements, and have the ability to promote and control economic development in ways non-home-rule communities cannot.
Burns said residents of home rule communities still have the full protection of both the Illinois Constitution and the Federal Constitution. She also said studies have shown that tax rates are not necessarily higher in home rule communities.
“The home rule government can do things that are more creative or a better fit for their community that can keep those tax rates down,” Burns said.
Many home-rule governments self-impose limitations on their powers, Burns said. For example, a three-fifths supermajority vote could be made mandatory for any government action that would raise revenue beyond non-home-rule tax caps.
The current fiscal state of Clarendon Hills
Recklaus said that the village strives to keep a year-to-year fund balance that’s equal to 40 percent of its yearly budget. And while Clarendon Hills currently has “historically low staffing levels” and many shared-service agreements, it will become more and more difficult to maintain that 40 percent fund balance because of increasing costs that are out of the village’s control. Among those costs are unfunded state mandates, increasing pension obligations, and increasing employee health-benefits expenditures.
“We don’t think that we’re going to be able to cut tremendously farther without failing to operate and failing to meet some of our obligations,” Recklaus said.
If expenditures increase by a rate of five percent each year and new revenues are not raised, Recklaus said, the village will be running a deficit in five years and will be “out of money” by 2020.
According to Recklaus, Clarendon Hills has one of the lowest sales-tax-revenue-per-capita rates in the state.
“Essentially we have Jewel, we have businesses downtown, and we have several businesses on Ogden Avenue," the village manager said.
And while property tax revenues in Clarendon Hills went up during the last decade because of teardowns and new construction, Recklaus said that without home rule the village’s share of the property tax can only be increased by a rate equivalent to the Consumer Price Index (CPI), which is not increasing at a large enough rate to keep up with rising village expenditures.
How Clarendon Hills would use home rule
Hartnett said with home rule, the village would seek to raise its sales tax rate, implement a demolition tax, and create a capital improvements tax that would replace the village’s network of Special Service Areas (SSA).
All revenue-raising measures would have to be passed by the Village Board and go through same public process that all resolutions and ordinances currently do.
The proposed capital improvements tax would replace SSAs, which are currently used to raise revenue for road improvements in particular areas of the village. The new tax would raise the village’s portion of a resident's property tax bill by 13 cents per $100 of their home's Equalized Assessed Valuation (EAV).
Currently, the village’s portion of the tax bill is 54 cents per $100, so it would be raised to 67 cents per $100 with the new tax. Such an increase would give the village an additional $696,000 of revenue per year.
Hartnett said the new tax would spread the cost of road improvements to all residents, not just those in SSAs, and would eliminate the costly practice of setting up SSAs.
With home rule, the village would also seek to raise its sales tax rate by one percent and repeal its current places-for-eating tax. The result would be a $100,000 annual revenue boost.
Finally, Hartnett said Clarendon Hills would seek to mirror villages like Lake Forest and Evanston, who currently have a $10,000 tax for residential-building demolition. Such a tax would raise $120,000 in additional revenue annually and go towards village costs related to demolition, such as damaged road and stormwater improvements. The remaining dollars would go into the village’s funds.
Some residents present Wednesday expressed concern over the $10,000 tax, and Recklaus said the tax amount is only a plan currently and could be altered if home rule were attained.