Property Tax Q&A
The Village of Flossmoor wants residents and property owners to be knowledgeable about Village finances and property taxes. To that end, in an effort to be transparent, we have compiled a list of commonly asked questions with regards to taxes and spending. For additional information, contact the Village of Flossmoor Finance Department at 708-798-2300 or Info@Flossmoor.org.
- Where does the Village get its money to provide services to residents and businesses?
The Village’s operations are primarily funded through a combination of taxes and fees. For fiscal year 2023, the Village’s General Fund had operating revenues of $12.5 million. The chart below shows how multiple general fund operating revenue sources combine to fund Village services.
- I’m new to Flossmoor. Why do property taxes seem so high?
Flossmoor, compared to many surrounding communities, has fewer commercial, retail and industrial properties to contribute to its tax base. As a result, a larger portion of the tax burden falls on residential properties. For this reason, new economic development is one of the Village’s top priorities to not only provide amenities to our community, but also to share in the property taxes. The tax rate for commercial property is 25% of the assessed valuation, as compared to 10% for residential property, which means commercial properties assume more of the property taxes compared to residential taxpayers. In addition, Flossmoor benefits from sales tax revenue, which also increases when we have more retail commercial businesses. Recent commercial development — such as Meijer and Dunkin’— have increased the tax base for the Village dramatically. Flossmoor increased revenue in 2018 when residents voted for a non-home rule sales tax in Flossmoor of 1%. Flossmoor receives 100% of this 1%. This tax added nearly $700,000 to the General Fund in fiscal year ending April 2023 and is projected to add $680,000 for fiscal year 2024.
- My annual property taxes are almost $12,000. Where do the taxes go?
Currently, only 17% of your property taxes goes to the Village of Flossmoor. This means that for every $1,000 on a tax bill, the Village receives $170. The rest of the funds go to other local taxing bodies, including the school districts, park district, library and Cook County.
- Are property taxes and sales tax the only sources of revenue for the Village?
No; while property taxes are the largest source of revenue, the Village also receives sales tax and a share of the state income tax. However, municipalities’ share of the state income tax in Illinois has been greatly reduced since 2011. That year Illinois first cut the distribution of the local share of the state income tax from 10% and eventually down to as low as 5% to fill a void in the State budget, and municipalities have been lobbying to restore this share ever since. For more information on this change, please visit the Illinois Municipal League website here.
- How are my tax dollars managed by the Village?
While the Village recognizes that tax bills are a concern to many residents, the community should feel confident that their tax dollars are well managed. The Village sustained an AA+ rating in fiscal year 2021, due to continued strong financial management, practices and policies. To be able to sustain an AA+ rating in fiscal year 2021 — amidst the challenges of the COVID-19 pandemic — was an incredible achievement for the Village. Flossmoor’s Finance Department is award-winning, having received the Government Finance Officers Association (GFOA) Certificate of Achievement in Financial Reporting for 45 consecutive years. The Finance Department has had five or fewer audit adjustments every year since 2006. In fiscal year 2023, the auditors have reported that no audit adjustments were needed.
- I notice quite a bit of street construction and sidewalk replacement. Do my property taxes pay for this work?
Property taxes are a major source of funding for our operations and these projects. The Village of Flossmoor obtained a General Obligation Bond through a referendum that residents voted for in November 2020. The G.O. Bond is a funding mechanism repaid by property taxes; this bond covers street rehabilitation and sidewalk replacement, as well as storm water improvements to the Flossmoor Road viaduct and the area upstream that contributes to significant downtown flooding. The Village also uses grants to fund infrastructure projects. For example, the recent Berry Lane Drainage Improvement Project garnered $2.2 million in federal, state and regional grants.
- In light of these capital projects, what was the initial impact on my property taxes?
The General Obligation (GO) bond (mentioned above) for streets, sidewalks and storm water improvements was timed to replace bonds that were issued to build the new Flossmoor Public Library building in the early 2000s. The GO bond debt service didn’t begin until the library bond was paid off. The GO bond for streets, sidewalks and storm water improvements caused only a slight increase in property taxes. For example, a resident with property taxes of $12,000 saw an increase in their property taxes of approximately $7 per year.
- While I’m glad to see efforts to improve infrastructure, will my property taxes be higher?
The amount by which your taxes may increase is dependent upon the rise or fall of all the other properties’ assessed values included in the levy. These projects are only partially funded by taxes and other Village revenue; therefore, the Village must seek other funding sources such as grants, bonds, loans, allocations from savings and other sources.
- How is the amount I pay in property taxes determined?
Property taxes are based on the market value of your personal residence. You’ll notice when you view your property tax bill that the assessed value is lower than the market value of your home (i.e. listing price). The assessed value is a legally defined percentage of your home’s market value and is a key component of Cook County calculating your tax bill. For questions about how your property value is assessed, please visit the Cook County Assessor’s website by clicking here.
- How does the Village save taxpayers money when its infrastructure projects are paid for in cash without borrowing and incurring debt?
The Village operates under a “save then spend” philosophy, which is achieved through careful, forward-thinking financial planning and frequent review of our financial position. Much like a homeowner’s mortgage, when the Village does not have to incur debt, interest expenses are avoided which, in turn, limits property taxes. When the Village has to incur debt for projects, however, the least expensive type of financing typically is General Obligation bonds, which are done with property taxes as the repayment source. Keep in mind that non-home-rule communities — such as Flossmoor — generally cannot take advantage of low interest rates on borrowing when immediately available, as the Village is first required to seek the public’s direct approval through a referendum process.
- How else does being a non-home rule municipality impact borrowing costs?
Simply put, the Village is subject to additional control, regulations and oversight by the State of Illinois. This means our municipality can often be at a financial disadvantage, sometimes costing taxpayers thousands of dollars. A good example of this relates to General Obligation bond borrowing for infrastructure projects. Until 2022, interest rates had been at historically low levels. As a non-home rule municipality, the Village is required to obtain voter approval for borrowing through a referendum. It can take four to six months to access a historically low interest rate bond market. In April 2021, the Village obtained a bond at the low rate of 1.71%. Throughout 2022, interest rates soared upwards, adding 4.25% to costs in just 12 months. If the bond issuance had been delayed to 2022, the rising interest rates would have cost taxpayers hundreds of thousands of dollars. For example, an additional 4.25% on a $5 million 20-year bond would cost approximately $2,522,000 in additional interest, which means $2,522,000 in additional taxes.
- What is the current outlook for the Village’s finances?
The Village continues to manage its finances responsibly, and we repeatedly receive an unmodified opinion from the auditors. The Village is being impacted by national, state and regional economic conditions, such as surging inflation, rising interest rates and supply chain disruptions. Despite these challenges, the Village’s sound financial management, policies and procedures have resulted in it being in a stable position. The Village continues to maintain its AA+ rating with Standard & Poor’s. Additionally, the Village’s Annual Comprehensive Financial Report (ACFR) received the prestigious GFOA Certificate of Achievement (COA) award for the 45th consecutive year. The Village’s General Fund finished fiscal year 2023 with an operating surplus for the year resulting in a healthy fund balance of $8,877,866. The fund balance is sufficient to cover reserves and capital/non-operating projects as identified by the Village Board in the fiscal year 2024 budget.
That said, the fiscal year 2024 General Fund budget does reflect an operating deficit of $739,307, which is an amount that can be covered by the fund balance (savings) and/or by deferring capital projects. An area of concern has been the Water & Sewer Fund, which recently finished fiscal year 2022 with a decrease in fund balance and below reserve levels for the fund. The fiscal year 2024 budget for the Water & Sewer Fund reflects an operating surplus, which will help improve the health of the fund. Maintenance and repair work of our water system is a costly, but necessary, priority. Improved operations will help restore the required fund balance.
- Doesn’t the Village have reserves that can be used to defray these additional costs and projects?
A portion of the Village’s savings (fund balance) is held as a reserve and a large portion of it is allocated for capital projects, so that the Village can use cash versus debt to save on project costs. The Village has used some of its savings to help in the short term with the operating budget deficit in the General Fund, but there is not enough savings to sustain that strategy long-term. Without additional revenue and/or cuts in services, it was anticipated in its most recent 5-year projections done in fiscal year 2023 that the Village would spend down to its financial reserves by 2027. The remaining reserves are protected by Board policy in case of a catastrophic event.
- How can I more closely follow the Village’s expenditures?
The Village has a very transparent budget process and publishes detailed budget documents throughout the fiscal year (May 1 through April 30) at the beginning, mid-point and end, which includes lengthy narratives of historical context and the use of funds. Variances in the amount of $750 or more are reported. The Village Board approves all payments to vendors at their regular Board meetings, and this information is made public in the Village Board agenda packet on the Village website on the Friday prior to each Board meeting. Financial documents — including the Annual Comprehensive Financial Report and Annual Operating Budget — can be found at http://www.flossmoor.org/157/Finance.