February 15, 2012

Clarendon Hills Home Rule

Informational Session

Home Rule Discussion in Clarendon Hills

Current Financial Condition of the Village

AAA Rating given in 2011 Only 2% of municipalities in Illinois have

attained a AAA rating from Moody’s, Fitch or S&P.

Until now have maintained at least 40% of annual costs in reserve

General Fund Expenditure Summary

President/Board/Commissions

1%

Administrative/Finance

10%

Police44%

Fire17%

Public Works15%

Community Development

5%

Misc.Administration/Transfers

3%

President/Board/Commissions $85,680 Administrative/Finance $620,970

Police $2,700,805 Fire $1,044,700

Public Works $902,915 Community Development $326,960

Misc.Administration/Transfers $400,150

*Not Including POC Firefighters

Fire Costs Vs. Calls

Contracting and Shared Services

Engineering Building/plumbing/electrical inspections Plan reviews Information technology Various Public Works services Shared 9-1-1 dispatch Regional major crimes investigations Automatic mutual fire aid agreement (Hinsdale) Library shared services: IT, payroll, tax levy, snow removal,

phone Liability and health insurance pools participation Exploring shared police service model with Hinsdale

Budget Reductions

Total Budget Reductions since FY 08-09 = $1.98 million; including $1.1 million in cuts, $904,000 in deferrals

This year’s budget process is under way and will include additional reductions

Budget Reductions

Elimination of positions in Community Development, Finance, and Police Departments

Elimination of out-of-state employee training/benefits, reduction in other training

Eliminated all non-emergency OT Establishment of new compensation plan eliminated cost of living

increases for non-union employees Reduced infrastructure maintenance, tree trimming, sidewalk

replacement and general beautification Elimination of downtown sidewalk snow removal program Reduction of downtown planting program, replacement with

sponsorship program Deferral of several capital purchases Increase in employee insurance copays

Personnel vs. Non-Personnel Costs

General FundBudgeted Revenues

History of General FundRevenues and Expenditures

Future Concerns

Reduction in revenue sharing from the State Additional unfunded mandates Aging infrastructure Costs out of Village’s control 21% of the General Fund’s expenditures go

toward pension and healthcare premiums

Future Concerns

Lack of sales tax base Slow down in real estate growth Dependence on property tax

General Fund Balance ProjectionsNo Additional Revenues

*Assumes expenditures increase by 5 percent.

General Fund Projections Revenue Assumptions

Taxes increase by 2.5%. Intergovernmental Revenues (Income Tax, Sales

Tax, State Use Tax) increase by 1%. Also includes estimated revenues from Infiniti dealership.

Licenses and Permits increase by 2%. Services Charges increase by 2%. Fines and Miscellaneous increase by 3%. Investment Income equals 2% of prior year fund

balance.

General Fund ProjectionsExpenditure Assumption

Expenditures increase by 5% annually. Average Increase over past 5 years

General Fund Balance ProjectionsNo Additional Revenues

*Assumes expenditures increase by 4 percent.

Capital Fund Balance Projections No Additional Revenues

If additional revenue sources are not obtained, the Village would need to choose between funding operations or capital improvements. Based on the Village’s current ten year capital plan, the Capital Fund balance would be depleted by FY2019.

Impact of continued cuts

Slower administrative response times due to reduced hours Reduction in community event support Reduced CBD beautification/maintenance Slowing down of road/capital program implementation Scaling back or elimination of new rolled concrete curb

installation’s throughout town Elimination/scaling back of non-core functions such as

DARE Decreased ability to review operational efficiencies

“If you want things to stay the same, then things will have to change”

-Giuseppe di Lampedusa

What is Home Rule?

What is Home Rule?

Constitution of the State of Illinois:Adopted at special election on December 15, 1970

Article VII, Section 6: Powers of Home Rule UnitsA County which has a chief executive officer elected by the electors of the county and any municipality which has a population of more than 25,000 are home rule units. Other municipalities may elect by referendum to become home rule units. Except as limited by this Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt. Source: http://www.ilga.gov/commission/lrb/conmain.htm

Home Rule in IllinoisAddisonAlgonquinAlsipAltonArlington HeightsAuroraBannockburnBarrington HillsBartlettBatavia

BartonvilleBedford ParkBellevilleBellwoodBentonBerkeleyBerwynBloomingdaleBloomingtonBolingbrookBridgeviewBryantBuffalo GroveBurbankBurnhamCahokiaCalumet CityCalumet ParkCarbon CliffCarbondaleCarlockCarol StreamCarpentersvilleCartervilleChampaignChannahonChicagoChicago HeightsChicago RidgeChristopherCiceroCollinsvilleCountry Club Hills

CountrysideCrainvilleCrystal LakeDanvilleDarienDecaturDeerfieldDeKalbDePueDes Plaines

DoltonDowners GroveDuQuoinEast DundeeEast Hazel CrestEast St. LouisEdwardsvilleElginElk Grove VillageElmhurstElmwood ParkElwoodEvanstonEvergreen ParkFairview HeightsFloraForest ViewFreeportGalesburgGlen EllynGlendale HeightsGlenviewGlenwoodGolfGranite CityGurneeHanover ParkHarveyHarwood Heights

Hazel CrestHerrinHighland ParkHighwood

HillsideHodgkinsHoffman EstatesHomer GlenHopkins ParkInvernessJacksonvilleJohnston CityJolietKankakeeLake BarringtonLake BluffLake ForestLake in the HillsLansingLaSalleLincolnshireLincolnwoodManhattanMarion

MarkhamMascoutahMaywoodMcCookMcHenryMettawaMidlothianMolineMoneeMonmouthMorton GroveMound CityMount Prospect Mount VernonMuddyMundeleinMurphysboroNaperville

NaplesNauvooNew LenoxNiles

NormalNorridgeNorth ChicagoNorth UticaNorthbrookNorthfieldNorthlakeOak ForestOak LawnOak ParkOakbrook TerraceO'FallonOld Mill CreekOnargaOrland ParkOswegoPalatinePark CityPark ForestPark RidgePekinPeoriaPeoria HeightsPeruPhoenixPlainfieldPosenPrairie GroveQuincyRantoulRiverdaleRiverwoodsRobbinsRock IslandRockdaleRolling MeadowsRomeovilleRosemont

Round Lake BeachSaint CharlesSauget

SchaumburgSchiller ParkSesserShermanSkokieSouth BarringtonSouth HollandSpringfieldStandardStickneyStone ParkStreamwoodSycamoreThorntonTiltonTinley ParkTuscolaUniversity ParkUrbanaValmeyerVoloWarrenvilleWashingtonWatsekaWaukeganWest ChicagoWest CityWest DundeeWest FrankfortWestmont*WheatonWheelingWilliamsvilleWilmetteWinnetkaWoodridge

Home Rule in IllinoisAddisonAlgonquinAlsipAltonArlington HeightsAuroraBannockburnBarrington HillsBartlettBartonvilleBedford ParkBellevilleBellwoodBentonBerkeleyBerwynBloomingdaleBloomingtonBolingbrookBridgeviewBryantBuffalo GroveBurbankBurnhamCahokiaCalumet CityCalumet ParkCarbon CliffCarbondaleCarlockCarol StreamCarpentersvilleCartervilleChampaignChannahonChicagoChicago HeightsChicago RidgeChristopherCiceroCollinsvilleCountry Club Hills

CountrysideCrainvilleCrystal LakeDanvilleDarienDecaturDeerfieldDeKalbDePueDes Plaines

DoltonDowners GroveDuQuoinEast DundeeEast Hazel CrestEast St. LouisEdwardsvilleElginElk Grove VillageElmhurstElmwood ParkElwoodEvanstonEvergreen ParkFairview HeightsFloraForest ViewFreeportGalesburgGlen EllynGlendale HeightsGlenviewGlenwoodGolfGranite CityGurneeHanover ParkHarveyHarwood Heights

Hazel CrestHerrinHighland ParkHighwood

HillsideHodgkinsHoffman EstatesHomer GlenHopkins ParkInvernessJacksonvilleJohnston CityJolietKankakeeLake BarringtonLake BluffLake ForestLake in the HillsLansingLaSalleLincolnshireLincolnwood

ManhattanMarion

MarkhamMascoutahMaywoodMcCookMcHenryMettawaMidlothianMolineMoneeMonmouthMorton GroveMound CityMount ProspectMount VernonMuddyMundeleinMurphysboroNaperville

NaplesNauvooNew Lenox

Niles

NormalNorridgeNorth ChicagoNorth UticaNorthbrookNorthfieldNorthlakeOak ForestOak LawnOak ParkOakbrook TerraceO'FallonOld Mill CreekOnargaOrland ParkOswegoPalatinePark CityPark ForestPark RidgePekinPeoriaPeoria HeightsPeruPhoenixPlainfieldPosenPrairie GroveQuincyRantoulRiverdaleRiverwoodsRobbinsRock IslandRockdaleRolling MeadowsRomeovilleRosemont

Round Lake BeachSaint Charles

SaugetSchaumburgSchiller ParkSesserShermanSkokieSouth BarringtonSouth HollandSpringfieldStandardStickneyStone ParkStreamwoodSycamoreThorntonTiltonTinley ParkTuscolaUniversity ParkUrbanaValmeyerVoloWarrenvilleWashingtonWatsekaWaukeganWest ChicagoWest CityWest DundeeWest FrankfortWestmont*WheatonWheelingWilliamsvilleWilmetteWinnetkaWoodridge

Are Communities like Clarendon Hills becoming Home Rule?

Suburban Towns with Average Home Sales over $600,000

Kenilworth 2,494 Burr Ridge 6,785

Bannockburn 1,429 Wilmette 27,651

Winnetka 12,419 Mettawa 367

Lake Forest 20,057 Clarendon Hills 8,427

Glencoe 8,762 Long Grove 6,735

Hinsdale 15,715 Inverness 6,749

Barrington Hills 1,979 Lake Bluff 6,056

Oak Brook 8,702 River Forest 11,635

South Barrington 3,760 Kildeer 3,460

Northfield 5,389 Riverwoods 3,905

Suburban Towns with Average Home Sales over $600,000

Bannockburn 1,429 Wilmette 27,651

Winnetka 12,419 Mettawa 367

Lake Forest 20,057

Inverness 6,749

Barrington Hills 1,979 Lake Bluff 6,056

South Barrington 3,760

Northfield 5,389 Riverwoods 3,905

Suburban Towns with Average Home Sales over $600,000

Bannockburn 2006

Winnetka 2005 Mettawa 2006

Lake Forest 2005

Inverness 2000

Barrington Hills 1990 Lake Bluff 2005

South Barrington 1975

Northfield 2005 Riverwoods 2006

Uses of Home Rule Fee recovery Legal and local control Stronger Business licensure to prevent fraud and abuse Intergovernmental agreement flexibility, including

additional opportunities for shared services limited for non-home rule communities

Elimination of State “Tax Cap” Impact fees on construction and development Property acquisition and disposal Broader powers to promote and control economic

development Ability to eliminate obsolete organizational arrangements

Limits on Home Rule Article VII limits certain abilities of home rule municipalities:

Issued debt which is paid by ad valorem property tax receipts may not have a maturity period longer than 40 years

Home rule units have a constitutional debt limit No home rule unit may define or provide for felonies, or for

Class A misdemeanors without specific statutory authority The General Assembly can also vote to impose additional limits

on home rule units of government Village Board still made up of representatives of the community; still

subject to local election 50% of Board up for re-election every other year

Example of Self imposed limits: Local “Tax Cap” has been proposed and will be discussed at the

February 21st Board Meeting

Home Rule in Practice

Research shows that home rule municipalities do not have a higher property tax rate on average than non-home rule municipalities. (Banovetz 2002; Banovetz and Kelty 2002; Dye and McGuire 1997; Wood 2011)

Historically, voters in home rule communities want to retain home rule. No community has rescinded home rule since 1983.

Home Rule Research Committee

Home Rule Committee Process

Committee was formed in May, all volunteers who stepped forward were put on the committee.

In June, a presentation by Village Staff on Home Rule, and the Village’s financial condition. Committee members identified information they felt they needed to make a decision on the issue.

In July, the information requested by the committee was presented to them. The Committee requested that guest speakers be invited to the next meeting that had experience with and knowledge of home rule.

In August, Mayor David Brummel of Warrenville, IL, and Patrick Lucansky of the law firm Klein, Thorpe, and Jenkins spoke. Village staff also presented additional financial analysis information requested by the Committee at the July 7th meeting.

In September, the committee discussed five motions prepared by Village staff relating to the appropriateness and potential use of Home Rule in Clarendon Hills. The Committee approved the final report document for submittal to the Village Board.

Home Rule Committee Findings

The attainment of Home Rule status is appropriate for the Village of Clarendon Hills at this time: 10 yes, 2 No

Home Rule status should be utilized to affect an increase in the Village’s property tax rate beyond the authority allowed Non-Home Rule municipalities: 9 Yes, 3 No

Home Rule status should be utilized to affect increases in other revenues, as determined by the current and future Village Board, to offset increases in property taxes: 11 yes, 1 no

The Village Board should utilize non-financial Home Rule powers as they deem appropriate and necessary: 9 yes, 2 no, 1 abstention

If a Home Rule referendum is attempted and fails, the Village should pursue an increase in property taxes by referendum: 11 yes, 1 abstention

Updated Plan including Home Rule

Maintain General Fund balance through Sales Tax, reassignment of existing revenues from Capital Fund to General Fund

Use of Home Rule for additional Cost Savings and efficiencies and expanded Economic Development

Slow down of capital expenditures, additional cost sharing with residents and borrowing for future large projects

Continued engagement with residents on budgetary priorities and revenue

Possible property tax referenda in future years

Home Rule Use

Home Rule Sales Tax

Places for Eating Tax (PFE) could be repealed and an overall 1% sales tax could be put into place

This would generate $200,000 a year ($100,000 if PFE Tax were repealed)

Would eliminate local administration of the PFE Tax

Sales Tax for Surrounding Communities as of July 1, 2011

Willow Springs 9.50%

LaGrange 8.75%

Western Springs 8.50%

Darien 8.25%

Downers Grove 8.25%

Hinsdale 8.25%

Willowbrook 8.25%

Oak Brook 7.75%

Westmont 7.75%

Burr Ridge 7.50%

Clarendon Hills 7.25%

General Fund Balance ProjectionsNo Additional Revenues

*Assumes expenditures increase by 5 percent.

Beginning in FY2013, Home Rule revenues include a 1% Sales Tax and repeal of the Places for Eating Tax. In addition, a Portion of Utility Taxes would be reassigned to the General Fund beginning in FY2016. 4.5% annual increase in ex.p. assumed

General Fund Balance Projections with Home Rule Sales Tax and Transfer of Existing

Revenues

General Fund Balance Projections with Home Rule Sales Tax and Transfer of Existing

Revenues

Beginning in FY2013, Home Rule revenues include a 1% Sales Tax and repeal of the Places for Eating Tax. In addition, a Portion of Utility Taxes would be reassigned to the General Fund beginning in FY2016. 4% annual inc. in exp assumed

Capital Fund Balance Projections No Additional Revenues

If additional revenue sources are not obtained, the Village would need to choose between funding operations or capital improvements. Based on the Village’s current ten year capital plan, the Capital Fund balance would be depleted by FY2019.

Capital Fund Balance Projections Partial Transfer of Rev/Exp Reduction

Utility tax revenues are shared with the General Fund beginning in 2016, road program is significantly diminished with greater cost sharing with residents. Additional borrowing may have to be considered to maintain funding levels

Other Considerations Economic Development Advantage

Very competitive environment as communities fight to expand their tax bases

Protection from Springfield Supermajority needed to impose a mandate on a

Home Rule Community Operational Flexibility = additional savings Only option that combines revenue and

increased flexibility

Questions?