Village of Spring Grove
Dear Residents
I would like to address an issue that we are currently experiencing in our Village. Over the last six years the
Village has seen a large drop in revenue growth and a large increase in expenses. Prior to the recession the Village
was a growing community with housing starts between 70 and 100 per year along with a strong manufacturing
base that included Intermatic and Actown. The recession forced these businesses to shut down or outsource their
manufacturing which resulted in the loss of hundreds of jobs and utility tax revenue. The housing market has also
been hit very hard with new housing starts of less than five per year since 2008.
The Village has one of the lowest municipal property tax rates in McHenry County. Spring Grove has a tax rate
of 0.413, and receives $250 from a home with an assessed value of $200,000. As a comparison, the Village of
Richmond has a rate of 1.01 and the Village of Johnsburg’s rate is 0.584. This same home would pay $607 and
$354 respectively to each Village. These property taxes, along with utility taxes, building permit fees and other
revenue sources cover our police protection, snowplowing, road resurfacing and maintenance, parks maintenance,
recreation program, and the building and administration departments.
We have recently seen a very large increase in expenses with respect to police pensions, road resurfacing and
employee health insurance. These expenses have more than doubled and the Village lacks the revenue to maintain
our roads as we would like and to pay the required police pension cost. With one acre zoning there is not enough
revenue produced from each household to maintain the current infrastructure costs. Our police pension
contribution has more than tripled since the voters approved it back in 1997 with over 45% of the property taxes
collected going toward the police pension, leaving less money for other projects.
Some may ask what the Village has done to combat the loss of revenue. Over the past few years the Village has
applied for and received over $1,000,000 in grants to enhance our roads and parks. It has controlled costs with
relatively flat budgets, increasing employee health insurance contributions, and the elimination and consolidation
of employee positions. Money normally spent on infrastructure and other programs has been decreased and roads
that should be resurfaced are only being crack sealed and patched. We continue to enhance economic growth with
the addition of Jewel, Walgreens, McDonald’s and a new strip mall and we have worked with Scot Forge, one of
the largest manufacturing employers in McHenry County, and All-Rite Spring Company to help them each grow
their businesses with major expansions that added more jobs and also increased our utility tax revenue. The
economic expansion and grants have helped us balance our budget but they are not enough to sustain the
increasing costs. This leads me to the major problem facing the Village - how do we pay for these increasing costs?
After much consideration and a desire to maintain the quality of life in Spring Grove, the Village Board
determined that in order to meet its financial obligations, it would place a referendum on the April 7 ballot asking
to increase the Village’s tax rate to .627 which would provide an additional $338,000 in funding that is
anticipated to be used towards the police pension requirements. Please take the time to read the attached
information which explains our obligations, goals and the impact an approved referendum will have on our
community.
Sincerely,
Mark R. Eisenberg
Village President
IMPORTANT REFERENDUM INFORMATION
Introduction & Background
Police officers perform a valuable service – keeping our community safe. Their efforts are greatly appreciated. For
their service, we recognize that our community has an obligation to help provide for their retirement. The Village
is required by state law to provide a pension system sustainable to ensure affordability for taxpayers. Municipalities
throughout Illinois, including Spring Grove, are having their budgets strained by unfundable pension
contributions. To compound the issue, a state law passed in 2010 requires municipalities to put public safety
pension funds on a schedule to be 90% funded by the end of 2040. As a result of this law, the police pension
funding level dropped from 47% to 38%. Beginning in 2016, municipalities are required by the law passed by the
state legislature to make employer contributions to police pensions in an amount that is determined by one of
three actuarial calculations. Any difference between what is recommended by an actuary and what a municipality
actually contributes can be diverted from the municipality’s state-shared revenue to the pension fund. In other
words, if the Village Board exercises its discretion to direct Village tax funds to other priority areas such as road
maintenance, the state can automatically divert the sales tax the Village is to receive to the pension fund.
The goal of every pension fund is to have sufficient funding available to meet current and future obligations. The
Village’s police pension fund is currently 38% funded even though the Village has contributed its required amount
since its inception in 1997 and the Pension Fund Board has adequately managed the fund by making solid
investments.
In 2011, the Village’s contribution was $163,000 but by 2013, it was $296,000, an increase of over 80%. The
estimated contribution in 2016 is $332,000, a 204% increase since 2011.
Despite increasing pension contributions from the Village, the pension liability continues to increase. Why? Lower
interest rates, people living longer, and investment constraints dictated by state statute. This trend is impacting
not only Spring Grove but municipalities statewide. The increasing pension costs have cut into critical programs
and services.
What Referendum Question Will Voters See On The Ballot?
The wording of the question is determined by state statute. The question will appear on the ballot as follows:
Shall the limiting rate under the Property Tax Extension Limitation Law for the Village of Spring Grove,
McHenry County, Illinois, be increased by an additional amount equal to 0.2140% above the limiting rate for
corporate purposes for levy year 2013 and be equal to 0.627% of the equalized assessed value of the taxable
property therein for levy year 2015?
(1)
The approximate amount of taxes extendable at the most recently extended limiting rate is
$653,234.74, and the approximate amount of taxes extendable if the proposition is approved
is $991,755.55.
(2)
For the 2015 levy year the approximate amount of the additional tax extendable against
property containing a single family residence and having a fair market value at the time of the
referendum of $100,000 is estimated to be $71.33.
(3)
If the proposition is approved, the aggregate extension for 2015 will be determined by the
limiting rate set forth in the proposition, rather than the otherwise applicable limiting rate
calculated under the provisions of the Property Tax Extension Limitation Law (commonly
known as the Property Tax Cap Law).
Can You Explain The Referendum Question?
The Referendum ballot asks the Village of Spring Grove electors to vote “Yes” or “No” on the Referendum
question above.
A “Yes” vote on the question is a vote in favor of authorizing the Village to increase its limiting rate by an
additional $338,000. In the event a majority of electors vote “Yes” to the question, it is anticipated that the
Village will use the additional $338,000 for the police pension fund. This will free up a substantial amount of
other money to resurface roads and continue and maintain services.
A “No” vote on the question is a vote against authorizing the Village to increase its limiting rate by an additional
$338,000. If the referendum fails, the Village will continue to use its limited current funding sources to pay
towards police pensions and have insufficient funds to make necessary road repairs and maintenance. It’s unclear
how the Village will continue to repair and maintain them which will likely result in deteriorating roadways and
decrease in services.
What Impact Can An Approved Referendum Have On The Village’s Tax Levy And Tax Rates?
Without a successful referendum, the Village is limited to increasing its tax levy by the Consumer Price Index,
which over the last several years has been less than 2%, while the cost to fund the police pension fund has
increased over 80%. Currently, 45% of the tax levy goes toward the police pension fund. A property assessed at
$200,000 pays a total of $250.53 to the Village in property taxes.
An approved referendum could result in a total tax levy of $991,755.55 that would be levied in 2015 but collected
in 2016. The additional $338,000 would satisfy the Village’s obligation to contribute to the police pension fund
and allow the Village to continue improvements through the road program. If the referendum is approved, a
property assessed at $200,000 would pay an estimated total of $380.34 to the Village in property taxes.
The following table depicts the estimated difference in total taxes paid to the Village with and without an approved
referendum.
Property
Value
Without Referendum
$4.13/$1,000
With Referendum
$6.27/$1,000
Difference
$175,000
$216.11
$328.09
$111.98
$200,000
$250.53
$380.34
$129.81
$250,000
$319.35
$484.83
$165.48
$300,000
$388.18
$589.32
$201.14
Where Do My Taxes Go?
Your tax bill is distributed to nine (9) taxing jurisdictions. Your tax bill breakdown depends on what township you
reside in. See the chart below to see where you tax dollars go:
Jurisdiction
Nippersink School District 2
RBCHS School District 157
McHenry County
Spring Grove Fire Protection District
McHenry County College
Township & Cemetery
Village of Spring Grove
McHenry County Conservation District
Nippersink Library
Richmond Township
36.03%
31.79%
9.99%
6.20%
3.93%
3.86%
3.77%
2.51%
1.91%
Burton Township
36.62%
32.31%
10.17%
6.31%
3.99%
2.28%
3.82%
2.55%
1.94%
As you can see the Village only receives a very small portion of your property tax bill. In fact, the Village receives a
lower percentage of your property tax bill than McHenry County College and Richmond Township. Over the years
we have operated under very tight budgets with a minimum amount of staffing. The cost of having zoning with a
minimum lot size of one acre results in very expensive infrastructure costs when compared to the amount of tax
revenue collected from the Village’s subdivisions.
How Much Of My Property Taxes Goes Towards Village Operations?
Less than 4% of your tax bill goes to fund Village operations. Property taxes only make up 21% of the Village’s
revenues, with 10% of it going towards the Village’s police pension contribution. A majority of the Village’s
revenue is collected in state income and sales tax along with the utility tax. The revenues from these taxes make up
59% of the Village’s revenues. Licenses, Permits, Fines and Other Fees make up 14% and Other Revenues makes
up 5%.
Use &
Replacement
Taxes
3%
Revenues
Utility Tax
22%
State Sales Tax
17%
State Income Tax
17%
Other Revenues
5%
Police Pension
Property Tax
10%
Property Tax
11%
License/Permits/
Fees/Fines
15%
How Does the Village Spend My Tax Dollars?
The Village currently operates with a total General Fund budget of $3,100,000. A home with an assess value f
$200,000 pays the Village $250 in property taxes for Village operations. The chart below depicts how the Village
money is allocated.
Expenses
Recreation
2%
Police
35%
Administration &
Building
21%
Parks
3%
Police Pension
10%
Roads
13%
Public Works
16%
The Police Department, including the pension fund obligations comprises 45% of the Village’s budget. As the
Village’s pension obligation continues to increase, we are required to use more revenue from other sources to pay
towards the police pension fund. As a result, the money which was anticipated to be spent on repaving the roads
has decreased.
Speaking of roads, the Roads budgets comprises 13% of the Village’s budget. The majority of this budget goes
towards the maintenance and repair of roads, snowplowing and street lighting. Each mile of road costs $145,000
to repave. With 78 miles of roads to maintain, the current revenue stream is no longer sufficient for the Village to
maintain the roads, while providing snow plowing, street lighting and police protection.
If you have any questions please don’t hesitate to call the Village Hall or send us an email at
info@springgroveVillage.com.