O’Fallon Staff Discusses Raising Debt Service Portion of Property Tax

O’Fallon residents may see an increase in property taxes for 2012.

The discussed staff’s proposed recommendations for rates at the Thursday, Aug. 23 meeting.

Chief Finance Director Vicki Boschert said staff recommends maintaining the general fund rate at the current 35.62 cents per $100 assessed valuation and raising the debt service fund from 12.67 cents per $100 assessed valuation to 19.50 cents.

“This is the tax that last year, we did not increase, although the calculation, in order for us to make sufficient revenue to pay the debt service, would have called for us to increase that tax rate,” Boschert said, ”Instead, we left that tax rate lower and took money out of our fund balance reserve.”

The debt service fund, serviced by this property tax, pays for the city’s existing debt.

Ward 2 Councilman Jim Pepper reiterated this is not new debt. Boschert said any new debt can only be incurred after a ballot issue approved by voters.

Boschert added, in order to achieve a level that would fully service the city’s debt needs and keep from taking money out of the reserve, the tax rate needs to be adjusted.

She said the calculation used to determine the rate, was examined to gather an idea of what the fund would need for the next 10 years.

“What we don’t want to do, is we don’t want to have to set a rate, come back set a rate higher the next year and then lower the rate,” Boschert said. “I think it makes it harder for our residents to plan, when they’re trying to plan their budget.”

Ward 3 Councilman John Haman, Jr. voiced concerns for the tax hike during the meeting.

He said the city will need to pay close attention to what they want to spend and they need to spend.

“Twelve dollars doesn’t seem like much, but for a family that’s barely holding on--$12 is a whole lot,” he added.

Haman asked Boschert if there was any way the proposed rate could be lowered.

“In order to maintain the same revenue flow that we currently have in the general fund, the .3562 will achieve that,” she said, “If we lower that, we’re going to reduce the amount of revenue we have coming into the general fund.”

Haman responded that many O’Fallon residents also have a less money coming in as well.

The ordinance setting the tax levy will be brought before the council at the next meeting for a first reading.

Haman requested the ordinance be discussed beforehand at the next workshop scheduled for Thursday, Sept. 13 at 5:30 p.m.