At the public hearing for Schaumburg’s Property Tax proposal on December 15th, 2009, Village employees handed out a flyer that was in direct response to harsh criticism the Village has received in regards to numerous examples of wasteful spending highlighted by the Schaumburg Freedom Coalition over the last few years. I was absolutely appalled that the Village would hand out such a flyer when it was so riddled with distortions, misleading quotes, and outright lies about the Village’s activities and wasteful spending practices.

The citizens of Schaumburg deserve a full account of the truth in regards to this misleading flyer, and the below article is part two of the response to the Village’s flyer. The Village’s flyer text is italicized and our responses are noted below by each question or groups of questions.

Part 1 of Rebuttal linked here

7. Could the money spent on improvements in the Village’s Tax Increment Financing districts be used to fund services instead, and help reduce the deficit? No. TIF laws require that any money collected in the TIF district be used to improve the district and it cannot be used to provide local government services.

All wasteful spending, no matter which fund it comes from, ends up costing the taxpayers. TIF district spending is no different.

The Village of Schaumburg cannot ignore its wasteful spending in TIF districts. Spending such as the planned $6.5 million in subsidies for the luxury home Pleasant Square Development, $1.8 million for a “green parking lot”, fancy clock towers, water fountains, parkway trees and shrubbery plantings end up costing the people of Schaumburg money in the form of property taxes.

All TIF district revenue comes from property taxes. Currently for the people living in the TIF district, over 78% of their property taxes goes into the TIF district. Sadly, not one cent of this shows up on their property tax bills.

By eliminating wasteful spending and closing its Old Schaumburg Centre TIF district, the Village can offset over $2.6 million per year in additional property taxes. True, the Village cannot mix TIF funds with general fund revenues but that’s irrelevant when it comes to calculating the costs of wasteful government spending. The buck stops at the taxpayer and the Village’s wasteful spending makes our community’s taxpayers poorer.

8. Why can’t the Village hold off on the decision to levy a property tax? In order for money to be collected and disbursed to the Village in November or December of 2010 the tax levy needs to be filed by December 27, 2009. Based on current estimates, the Village’s General fund cash reserves will be exhausted sometime in the fall of 2010. If money is not received from the property tax vital services like fire, police, and public works will be cut dramatically.

The Village of Schaumburg purposefully waited until the last possible minute legally to start the process to impose a property tax.

The Village Board & Mayor Larson either intentionally waited until the last minute to notify the people of Schaumburg about its alarming financial situation to eliminate the opportunity for public input and opposition, or they were asleep at the wheel and completely negligent in their duties to be financial stewards of our community’s money.

The Village Board is using typical political scare tactics in saying that they will make dramatic cuts in core village services such as fire, police, and public works to justify huge tax increases. They are ignoring the tens of millions of dollars in wasteful non-core government spending that could be eliminated such as the Convention Center & Hotel, Airport, Alexian Field, etc.

9. How does the Village expect to meet expenses if its cash reserves will be exhausted sometime in the fall 2010? In addition to delaying expenses and cutting as much as possible prior to that point, the Village will either have to issue tax anticipation notes (basically a loan) or borrow cash from other funds temporarily.

Due to extreme increases in expenditures over the last 22 years, a 260% increase (see below) even after adjusting for population growth and inflation, the Village will likely be fundamentally bankrupt exhausting all reserve funds sometime next fall.

This property tax proposal comes on the heels of the Village implementing or hiking taxes 17 times since Al Larson became Mayor. The taxes already hiked since 1987 including the sales tax (twice), hotel tax (three times), amusement tax, telecommunications tax, hotel tax, restaurant tax, transfer tax, and creating two TIF districts. Despite this the Village says it is in a dire situation for more money.

If the property tax is enacted don’t expect a repeal or reduction of these taxes in the future. Mayor Larson has never repealed or reduced a tax after it was hiked in response to a “financial emergency” in the past.

Instead of hiking taxes the Village should have long ago looked at the root cause of the crisis, rapidly increasing expenditures.

10. How much has the Village General fund budget grown since 1987? The Village’s EAV increased from $1,163,722,833 in 1987 to $4,724,117,989 in 2008. If you factor in compounding, the average increase is 6.9% per year. The budget for 1986/87 was $26,865,350. The budget for 2009-10 is $81,502,780. With compounding, that is an increase of 4.95% per year. The Village General fund budget which is made up of services to the community has grown at a much slower rate than the property value of the community.

False, Village Expenditures, even after adjusting for inflation and population growth, have nearly quadrupled (260%) since 1987 .

The Village of Schaumburg’s 1986-87 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances showed the General Fund expenditures totaled $21,056,526, and the total expenditures across all funds totaled $24,945,912, not $26,865,350. The Village overstated 1987 General Fund Expenditures by $5,808,824 or 21%.

In the Fiscal Year ending 2009, Village General Fund expenditures were $78,287,237, and total Village expenditures across all funds were $200,334,108. With compounding, the growth of the general fund is 6.14% per year and with compounding the growth across all funds equals 9.9% per year.

The population growth since 1987 is approximately an increase of 11,934 or 18.6%. (1987 64,002 est.) (2007 75,936 exact) or .85% per year. U.S. inflation between 1987 and 2008 is 87.1%, or with compounding equals 3.02% per year.

In summation, the average yearly Schaumburg population growth plus inflation between 1987 and 2008 was 3.87%, much lower growth than the 6.14% growth of the general fund and the 9.9% growth of all funds. The Village of Schaumburg attempts to compare the growth in government to the EAV of property values. This number is no doubt distorted because of the real estate bubble of the last decade that lead to runaway housing prices. The EAV from Cook County have not yet fallen in correspondence with the collapse of the real estate bubble and falling housing prices.

If the Village of Schaumburg government grew at the rate of inflation plus population growth from 1987-2009 we would expect the Village’s total expenditures to be approximately $55.6 million dollars, instead it is $200.3 million dollars. Since 1987, the Village of Schaumburg’s expenditures have grown 260% faster than population growth plus inflation.

11. What has the Village cut already to reduce manage expenses? The Village always works to reduce expenses and has taken a significant number of actions over the last several years to decrease expenses. Almost $26 million in expense reductions have been achieved since 2001.

False. The Village of Schaumburg has not cut spending since 2001, instead it has dramatically increased spending.

In the years 2000/01, the Village’s total expenditures were $73,543,796, by 2008/09 Village expenditures exploded to $200,334,108. This represents an increase of 172%, well over $125 million in increased total expenditures.

In analyzing General Fund’s expenditures we can see huge increases there as well. The 2000/01 General Fund Expenditures totaled $56,307,554, in 2008/09 General Fund Expenditures totaled $78,287,237, an increase of nearly $22 million or 39%.

The Village cannot claim it has achieved $26 million in expense reductions because it has done the exact opposite and instead increased expenditures.

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