Marengo officials consider property tax increase

Marengo residents could see a property tax increase next year to help the city meet its minimum funding requirements on police pensions next year as pensions continue to consume a large share of the city’s funds.

Marengo City Council will vote on a 5% property tax levy increase for 2022 at the council’s meeting on Nov. 22. Village officials said it was not a step they wanted to take, but they saw no other way to meet the minimum funding requirements for police pensions next year.

The final property tax levy – the total amount the city collects in property taxes – may not amount to a 5% increase, however. Marengo is not a home rule municipality, so state law limits how much it can raise its levy by each year, tying the increases to the rate of inflation and new growth in the community.

Marengo will be required to make a minimum payment of more than $700,000 next year toward police pensions, Marengo Finance Director Jennifer Snelten said. The city has been meeting their minimum payments as required by state law, but the amounts are continuing to grow.

“It’s a moving target and it’s increasing exponentially,” Snelten told council members Monday.

According to village documents, the minimum payment has skyrocketed to over $649,000 for this current year from a total about $105,000 20 years ago. To pay for that annual increase, the city has devoted 109% of new property tax revenue to pensions alone in the last 20 years.

“The more money we have to take out of the general fund to meet that minimum contribution is less money we’re going to have for these roads,” Snelten said.

The city has worked to maintain minimum staffing and avoid extra expenses because pensions are eating up a significant portion of the city’s revenue, Snelten said.

If the property tax levy increases by the entire 5% next year, Snelten said the average property tax bill would increase by about $25. This would allow the city to bring in an additional $84,365 in property taxes next year.

Snelten said the city has to ask for a high levy increase to ensure they are able to keep all the funds they are allowed to under the state tax cap. Marengo will be able to lower how much its asking for in property taxes next year when additional information from the county becomes available in March, but if the city ends up allowed to collect more than 5%, it won’t be able to capture those dollars, according to village documents.

Since 2007, village documents show City Council approved property tax levy increases between 3% and 32% but the city actually saw the levy change between -3% and 5%.

Snelten said they do not expect the tax increase will need to be any higher than 5% for next year.

City Council gave Snelten the green light to move forward with creating a resolution allowing a 5% property tax increase next year, saying it was not something they wanted to do, but they did not see any other way for the city to meet next year’s pension obligation.

The council will vote on the property tax levy increase at their meeting on Nov. 22, with the final tax levies for next year to be voted in at the Dec. 20 meeting.