The pandemic and the associated health- and travel-related uncertainties seem to be largely behind us. During the pandemic lockdown, household savings saw a significant increase. Today, while these savings are still better than pre-pandemic levels, inflation is quickly eating into them.
This depletion in savings is more pronounced for moderate- to low-income earners. The geo-political situation and its impact on the U.S. (war in Europe and the related price of gas, plus strained trade relations with China) means that inflation will take longer to control, and a recession may be the price we have to pay to quell it. I set this brief context to highlight the economic pain and anxiety that may lie ahead for many communities — including ours — and especially for the most vulnerable among us.
What can we do to help our residents? Keeping our tax levy flat is a start, and this year we have the unique opportunity to do that. Let me explain:
A 3% tax levy increase in 2023 would collect $1.1 million from you for the Oak Park village budget. However, this year we are already receiving a one-time break on our police and fire pension contributions: a break equal to $1.4 million (equivalent to a 4% levy increase). So a flat levy for 2023 already has this 4% increase baked into it.
Over and above that, we still have unallocated ARPA dollars ($19 million) that can cover eligible community investments. We also have general fund balance/budget reserves more than double the current recommended maximum. (The current recommendation is 10-20% of annual operating expenditure [i.e. $6.5 million to $13 million] and our current actual reserves are sitting at $30 million.)
I believe it’s a good thing that we keep these excess reserves, considering the economic outlook; it gives us additional funds to draw upon if it were to become necessary.
Together, these factors give us ample opportunity to keep the tax levy flat for our residents without impacting key village services. Keeping the levy flat this year also allows us to start next year with a lower tax base.
While providing relief to our residents, we need to acknowledge the fact that inflation impacts the village budget just as much as it does us as individuals. Prices are rising and yet it has never been more important for Oak Park to make judicious and sustained investments in safety, health, and equitable and sustainable development. A flat levy this year does not preclude us from doing this.
Keep in mind that the village board controls only 15% of the total spending of our village and the board’s efforts to provide tax relief to residents can only go so far. However, if all our taxing bodies approach our respective 2023 budgets with a similar mindset, we can provide significant economic relief to our residents not just in 2023, but also over time.
Together, we can make Oak Park more affordable. Together, we can counter the pain and anxiety resulting from the economic uncertainty that looms large. I urge all our elected officials and staff to consider this as we go through our respective budget cycles.
Ravi Parakkat is an Oak Park village trustee.