As part of the first formal budget discussion for fiscal year 2025 Tuesday night at the Oak Park village board table, trustees debated the best approach to setting the overall tax levy.
The levy is the amount of money a local government raises from property taxes. Trustee Brian Straw seemed to think a less conservative approach to the levy is best, to ensure village services are properly funded and performed long term. But Trustee Ravi Parakkat said there are plenty of factors to discuss when setting a levy, seemingly favoring more of a conservative approach.
This budget kick-off meeting was held ahead of when Village Manager Kevin Jackson will present the board with a draft 2025 budget. The draft is expected in October according to village officials. Before that, Jackson and Donna Gayden, the village’s interim chief financial officer, will meet with department directors to discuss their financial needs and budgets.
The fiscal year for Oak Park is Jan. 1 to Dec. 31 of each year. The budget for 2025 is expected to be approved in December. For 2024, trustees approved a budget balanced by spending down about $6 million from reserves.
“[We’re] always looking for ways that we can achieve more with less,” Jackson said. “Ways to actually reduce costs, or manage costs, is always in the foreground, and still yet, how we can provide the best services possible to the residents.”
But Straw said, “if it takes a little bit more for us to achieve more of our board goals, then I’m OK with us doing more with more.”
The levy
The 2024 budget included an increase of 3% in the property tax levy. In 2023, the levy increase was zero.
Having a levy hike at zero is not necessarily a good choice, said Gayden. Because the levy increase that year was zero, the village gets $1 million less in revenue each subsequent year, she said. She has not yet made her recommendation for the levy for the 2025 budget, but it likely won’t be zero.
“I want you all [the board] to think about that the next time you think about not passing a levy: What it does for all future levies,” Gayden said Tuesday.
When the village had a levy increase of zero percent, Gayden said the decision was partially made because the fire and police pension payments had decreased. But those pension payments were expected to increase again and now have.
Earlier at the village board’s meeting Tuesday, trustees heard recommendations from a certified public accounting firm that it increase the contribution to the fire and police pensions from $13.8 million to $14.4 million in the coming year.
But the decision to zero out a levy hike in 2023 was also made, Parakkat said, because of additional revenue sources at the time, specifically federal American Rescue Plan Act dollars. But Gayden pointed out that those one-time revenue sources would eventually run out.
Straw said he’s interested in a levy increase that will maintain village services and account for historical levels of inflation over the past four years. It doesn’t have to be a drastic increase, he said, just something to put Oak Park on a good path forward. Straw also said some Oak Parkers have expressed concerns about village services decreasing, with changes to fall leaf collection being cited.
“We’ve not reduced any services as a result of not having revenues, at least in the last three years that I’ve been on the board,” Parakkat later said.
The differing perspectives on the levy between Straw and Parakkat resulted in a spat at the board table where Village President Vicki Scaman had to bang her gavel to bring the meeting back to order.
“What we’ve done tonight is continue to learn what the consequences of our decisions mean but we can still very much disagree on how that affects people’s everyday lives,” Scaman said at the end of the discussion. “It doesn’t need to be debated every time the topic comes up.”
Parakkat later said the board should all bring their perspectives and have a healthy debate.
Trustee Cory Wesley said Gayden is looking to smooth out revenue over time, whereas Parakkat is looking at real time revenue. And the board needs to decide which approach it wants to take in its tax levy policy, Wesley said.
“[A real time approach] might allow us occasionally to do a 0% levy but also means that occasionally we might have to do a 7% levy,” he said. “That’s a policy decision more than it is an argument.”
And Trustee Susan Buchanan pointed out that if the board decides to set a lower levy, it means they will have less money to achieve their goals or “wants” beyond the “needs” the village provides in its services.
“I see this current board as one that’s been very forward looking and we’ve added a lot to our goals that cost money,” Buchanan said. “I strongly support that forward looking, innovative, doing more to improve the quality of life and I’m willing to pay for those.”
Other budget considerations
Trustee Lucia Robinson also asked Gayden for suggestions on increasing other sources of revenue for the village, which the interim CFO said she is working on. One change to revenue Robinson mentioned is the loss of the state grocery tax, which means Oak Park stands to lose about $1 million in revenue per year. But the village will also start receiving revenue from the electric vehicle charging station fee implemented at the end of August.
Additionally, any remaining ARPA funds the village has in the bank need to be committed by the end of 2024 and spent by the end of 2026. Jackson said the village is trying to determine if the leftover funds could be classified as lost revenue rather than allocated to a specific fund, so trustees have more flexibility with the deadline.
Trustees will also have to take the five-year projected capital improvement plan into consideration when approving a 2025 budget. This plan lists upcoming village projects and their associated costs. The next CIP is expected to be approved in November.
Buchanan expressed her desire Tuesday to prioritize funding sustainability initiatives in the upcoming fiscal year such as promoting energy efficiency in buildings, investing in educational outreach to residents and businesses and expanding the Oak Park Climate Action Network’s climate coach program into a technical assistance center. These recommendations would cost about $900,000, she said, but seem to be the “bare minimum” of what Oak Park should be doing for sustainability.
The board will have more opportunities to provide direction on the levy, pension contributions and other budget considerations throughout the next few months of meetings before the final approval, expected in December.