Every two years after newly elected board members are sworn in, the Oak Park Village Board discusses and finalizes its priorities and goals for the next two years. This past week, the board — with staff support and an external facilitator — discussed the board goals. We were able to have a candid discussion about a wide variety of issues important to Oak Park, including community safety, equity, sustainability, and our economic vibrancy. However, I was dismayed and disappointed as my colleagues decided to eliminate the 3% cap on our tax levy increase from the board goals.
Instead, they decided to link annual tax increases to a non-existent financial policy document to be created through a policy discussion that has not occurred in my time on the board. A key financial guardrail to keep our community affordable, the 3% levy increase cap, is now eliminated and opens the door for uncontrolled spending and unavoidable tax hikes to support that spending.
I was surprised to find that I was the only vote against this approach. This, along with some of our recent votes (e.g. to potentially demolish and rebuild Village Hall at a huge cost to taxpayers) causes me grave concern for our community. The cumulative effects of this and several other smaller but equally shortsighted decisions could be felt in a few years, if not immediately.
What is special about the 3% annual cap on tax increases? According to the U.S. Federal Reserve, the average annual inflation in the U.S. since 1913 is 3.1% and since 1990 is 2.5%. So a 3% cap helps us align board policy decisions, village staff actions, and community expectations based on long-term trends, as opposed to reacting to short-term inflation fluctuations like the one we experienced last year.
Furthermore, municipal expenditure (e.g. long-term union contracts) does not track well to the annual inflation indices, and hence pegging our goals to historical averages is a sound approach.
This does not preclude us from making thoughtful decisions on tax levies, year over year, based on established community needs, which may raise taxes above 3% in a given year or drop it below 3% in others (e.g. 0% tax levy increase last year).
The lack of fiscal discipline leaves the majority in our community vulnerable. The top 20% of earners with household income of over $200K per annum will be fine. This leaves the middle-income earners, along with our retired seniors, with an income range of $70K to $200K, exposed to the disproportionate impact of our tax burden. This majority pays for our way of life and makes Oak Park what it is.
Let me illustrate this with an example. Imagine that the Garcia family (Shawna, Alex and their two kids) lives in a $400K single-family home paying $12K annually in real estate taxes from their $150K household income. They spend 30% of their income on housing, 30% on taxes + health care coverage, 30% on other living expenses, and save the final 10% toward retirement + college funds, emergencies, and — if there is anything left over — a family vacation, etc.
An annual 3% increase, doubles the tax burden in 20 years; a greater than 3% growth compounds over time and eats into the family’s long-term economic security. Residents like Shawna and Alex will have to think about our tax raises in the context of their household income and be forced to make uncomfortable choices. Shawna and Alex will be driven out of Oak Park, and without them our expensive community aspirations and social programs will collapse over time.
These very shortsighted decisions that we make today to bolster our legacy with signature initiatives — like a brand new Village Hall without the need for it fully established — will drive out the very diversity that we seek to foster. A future board will inherit this and many other avoidable affordability challenges.
The commitments I made to you during my campaign for trustee prioritized community affordability, fiduciary responsibility, and fiscal discipline. I can’t stand by quietly as we make decisions that put our shared future as a thriving, affordable, diverse, equitable and inclusive village in peril.
Oak Park is a special place. A place worth fighting for. If we don’t, then we become just another example of an American town declaring their values, and then acting in a way that belies them.
This is my attempt to make you aware of what I consider a series of poor, shortsighted decisions that will impact us all. It will require your attention and assistance to change the outcome. We should all be alarmed.
Ravi Parakkat is an Oak Park village trustee.