Better Government Association

Southland communities weigh benefits of tax rebates

By STEPHANIE GEHRING

August 3, 2008

Each year after residents pay their property taxes, a handful of municipalities in the Southland return the favor and rebate a portion of those taxes back to residents.

Crestwood started to offer rebates about 14 years ago. As their coffers spilled over with revenue from burgeoning commercial developments, Country Club Hills, Orland Park and Frankfort followed suit to one extent or another.

There are forms to fill out and administrative hurdles to jump through, but it's a pleasant predicament for municipalities.

In fact, Orland Park plans to preserve the practice despite a $4.8 million shortfall that forced officials to slash $1.2 million from departments' operating budgets.

"There is a segment of the population that really wants to see the rebate," said Orland Park Trustee Ed Schussler, chairman of the finance committee. "Whenever you provide a benefit or service as a government entity, people get to like that particular benefit or service and get unhappy if you take it away."

But one Orland Park resident - Terrence Camodeca - said he'd give it up.

"I have no problem in trying financial times with not getting a rebate if that means securing the budget," he said at a village board meeting.

Schussler estimated that about 90 percent of qualified property owners apply for the rebate, which the village has offered since 2002. The village funds the rebates with a portion of its home rule sales tax.

Like Orland Park, Frankfort also uses sales tax to pay its rebates. Frankfort village administrator Jerry Ducay said although sales tax revenue has started to level off, officials are not worried about being able to keep up the rebates.

The village has increased the percentage three times since 2000, when it began the rebates, Ducay said. The rebates are more practical than reducing the amount of taxes levied by the village, he said.

"If you have money that you're not spending and can still manage to appropriately pay for capital projects and the business of Frankfort, you should consider giving money back to residents," Ducay said. "If you reduce property tax levy today and need money later, you can't get it back without a referendum. This was a more direct way."

In most cases, the amount residents get back isn't likely to push anyone into a new tax bracket. But Frankfort resident Brad Wargin, who believes property taxes are unconstitutional, favors the rebate practice.

"I think it's a good public relations ploy because from my understanding, Frankfort and these small communities have a lot of money," he said.

The practice does raise some eyebrows.

Jay Stewart, executive director of the Better Government Association, a watchdog group, said it would be much simpler to lower the levy.

"If it is every year, the thought should be changing the property tax levy so it pulls in less money," he said. "If they pulled in appropriate money in the first place, appropriate to their costs, they wouldn't have to constantly rebate."

Tinley Park Mayor Ed Zabrocki agreed.

"It's a nice political gimmick," Zabrocki said.

His community has abated property taxes since 1982, which means residents pay less in property taxes because the village earmarks other revenue to pay off some of its debt.

Midlothian Mayor Thomas Murawski said his community also abates rather than rebates property taxes.

But Murawski feels his community was punished for being fiscally responsible when tax caps were implemented.

"Had I to do it over, my colleagues in Orland Park, Crestwood and other communities that rebate probably have it figured out. They didn't get caught by tax caps. They were levying (the) maximum amount by law," he said.

Country Club Hills Mayor Dwight Welch, whose community rebated $1.4 million last year, said more development will mean more money for residential property owners.

He agreed that people have grown accustomed to the rebates.

"People look for it," he said. "We built this into our programming. We have a strong budget."

During the past 14 years Crestwood has rebated about $50 million. Each year, the village pays the rebates with funds generated by sales tax, former Mayor Chester Stranczek said.

"We use the property tax bill as a barometer of what we give people," he said.

But it is time consuming, he said.

"A lot of people want to cheat us," he said. "We even have people in California file."

Tax rebates in the Southland

Crestwood:

*Has rebated property taxes for 14 years

*Rebates 43 percent of property owners' entire tax bill

*Uses sales tax revenue to rebate the money

Country Club Hills:

*Has rebated property taxes since 2000

*Rebates 12 percent of property owners entire tax bill

*Pays for the rebates out of its general fund

Frankfort:

*Has rebated property taxes since 2000

*Rebates 25 percent of what property owners pay to the village

*Pays for the rebates out of its sales tax revenue

Orland Park:

*Has rebated property taxes since 2002

*Under a new formula proposed the village would rebate the amount paid to the village minus the amount levied for pensions

*Pays for the rebates out of its home rule sales tax revenue