DeKalb’s Pension Rebound & Tax Games

This is a belated response to a November 12 story in the Daily Chronicle, “Police, fire pensions reportedly on rebound”. Instead of posting here at the time, I sent a letter to the editor. Three days later I still haven’t heard back.

The article makes it clear the City of DeKalb Finance Division knew all along that the pension investment returns would rebound after the recession. How is it they never told us we could have waited out the shortfalls since they were temporary? Indeed, there was an incredible sense of urgency during the budget crisis years to the point where DeKalb decided it had to raise the property tax rate by five cents for FY2009, on top of all the other emergency rate and fee hikes.

Secondly, I want to know what our rate for tax year 2011 (payable in 2012) will be. According to the DC, the City of DeKalb says it will ask for the same levy as last year. Well, they said the same thing last year, and the tax rate went up four cents. Even if the exact rate isn’t yet calculable, we should not allow council to vote on the levy without discussing at least a ballpark figure.

Here’s where my missive probably became “unfit” for publication: I laid out the game.

DeKalb plays a game of alternately manipulating tax rates and tax levies depending on conditions. If the value of taxable property in a given year goes up, the city keeps the tax rate the same. If the value of taxable property falls, the city maintains the same levy (levy being the total amount requested).

The language of “same” and “not going up” helps feed an illusion of fiscal responsibility even as actual tax bills rise.

From 2004 to 2008, DeKalb never talked “levy.” It instead bragged annually that it wasn’t raising the tax rate beyond 60 cents per $100 of Equalized Assessed Valuation (EAV). Meanwhile, delightful increases in market values during the period ensured that a frozen rate would provide equally delightful annual increases in the city’s take, at our expense.

From 2008-2010, however, city EAV dropped by $37 million. In 2009 DeKalb openly raised the rate from 60 to 65 cents to keep the sky from falling, but the strategy since then has been switched to “keeping the levy the same.” This has most recently produced a rate of 68.99 cents per $100 EAV.

DeKalb City Council is set to approve the annual property tax levy ordinance on Monday and according to the article, city officials are saying the proposed levy is the same as last year’s.

Uh, oh!

Keep an eye on this. City property taxes only go to pensions and FICA. If investment returns continue to improve we should be looking at lowering the levy. (We’ll need the savings for the Taj Mah-Library.)

Council was not able to finish its meeting last night. It will finish the last action items, including levy-setting, during a special meeting next Monday beginning 7 p.m.