First posted 2/12/2009 5:29 p.m.
Just one month into 2009, local officials are already looking at Plan B for the village government’s budget.
Oak Park Village Hall has the final tally for collections on real estate transfer taxes during January, and they’re about 60 percent less than last January.
When a property owner sells real estate in Oak Park, the seller pays $8 for every $1,000 in sale price. When real estate was booming in 2006, the village pulled in more than $358,000 from the tax that January, which is typically a slow month for home sales.
After a steady decline over the past three years, Oak Park collected only $47,208 from the tax this January, the lowest of any month since February 1995, according to the Village Clerk’s Office.
The village collected $2.4 million total last year, compared to $4.7 million in 2006. Oak Park was conservative in estimating that it might take in $2.5 million from the tax this year. But after the lack of activity in January, Village Manager Tom Barwin is worried Oak Park might be lucky to make half of that.
“I think it would be prudent to expect a 50-percent reduction in that revenue source this year, and be pleasantly surprised if it isn’t as drastic as it appears it might be,” he said.
To respond to the shortfall, Barwin said Oak Park will likely need to slice $1 million out of this year’s budget. This comes after the village already cut $2.5 million heading into this year to close a $3.1 million deficit, caused partly by slumping tax revenues. Capital improvements and personnel would be the likely source of cuts, the latter accounting for more than 80 percent of village hall’s expenses.
Oak Park is also looking to close transfer tax loopholes that exempt some property owners from paying the tax. There are 21 different exemptions to the transfer tax. According to Barwin, out of 58 real estate transactions last month, 21 were exempt.
The village board was scheduled to discuss an amendment to the real estate transfer tax ordinance on Tuesday night, after this story’s deadline.
Oak Park may also explore initiating new fees, or increasing old ones to raise more revenue. However, Barwin is hesitant to tap residents who are already squeezed by an ailing economy.
“That’s tough, too, because everyone is going through this challenge,” he said.