McHenry may see property tax levy increase to capture new growth; officials say taxes will still go down

Since 2010, the McHenry City Council has held the line on its tax levy, either not increasing the rate or, after decreasing it by 3% in 2016, increasing it by 2.6% in 2021.

Because the city has not, historically, increased the levy to capture new growth, City Administrator Suzanne Ostrovsky said Monday night, McHenry is collecting fewer property tax dollars now than it did in 2010 – about $24,000 less.

“There is a cost to holding the levy flat,” Ostrovsky said, including the $14 million “the city has chosen to not collect in property taxes” that it could have if the council increased the levy as allowed by the state’s tax cap law.

Government units that levy taxes must certify that levy to the county clerk by Dec. 31. Ostrovsky’s presentation Monday night asked the council for a consensus – but not a final vote – on whether they wanted to continue holding the levy as is, increase the levy by 3.4% as allowed by Illinois’ Property Tax Extension Limitation Law, increase the levy to capture new EAV growth or create a new levy for the city’s Northern Illinois Special Recreation Association dues.

McHenry, Ostrovsky said, is one of the few communities that pays its NISRA dues from the general fund rather than levy a separate property tax for the program. McHenry’s dues for the agency are about $163,000 annually.

The consensus voiced by council members was to allow Ostrovsky and finance director Carolyn Lynch to prepare documents increasing the levy by 1.2%. A resolution will appear on the Nov. 18 City Council agenda, with a public hearing and final adoption set for the Dec. 16 meeting.

The 1.2% increase would bring in an estimated $38,000 in new property taxes to the city, Ostrovsky said. For the owner of an existing home in McHenry, the levy increase “would result in a decrease in the city’s portion of the property tax bill by a total of $27.46 for a home valued at $200,000, and $34.34 for a home valued at $250,000,” according to their report to the council.

McHenry must levy to capture the increased EAV, 7th Ward Alderwoman Sue Miller said, if the city wants to continue to give residents the services and they want. “We can’t possibly, prudently, keep our tax levy flat and expect to make the improvements we need to make to our community,” she said. “All of our tax bills will literally go down.”

Fourth Ward Alderwoman Chris Bassi and 3rd Ward Alderman Frank McClatchey both said they were not in favor of the levy increase, even if it does not increase the city’s portion of property taxes.

“I think if we are comfortable giving away money for various grants. ... it is our responsibility to find the money, not the taxpayers,” Bassi said, referring to McHenry’s facade grant program.