Elgin City Council looking for alternative revenues to fund the budget to avoid 13.2% property tax hike

Elgin needs a proposed 13.2% increase in property taxes to fill budget gaps for general operations and police and fire pensions, but the city council wants to look at other ways to generate additional revenues to avoid a tax hike.

City staff is recommending the tax levy, the first in more than a decade, to increase general operations by $4.2 million and help fund $3.3 million in public safety pension payments. The contributions increased due to the increased number of retired police officers.

If the council approves the increase, the city portion of tax bills would increase between $12.50 and $20.53 a month depending on the property’s equalized assessed valuation, according to figures the city released.

Management Analyst Giovanni Jungo explained what homeowners would pay during Wednesday’s special meeting kicking off the 2026 budget discussions.

Jungo said the calculations are estimates based on median income values from 2023, the latest data available. Accessed valuation is calculated by the tax assessor’s office, he said.

The median home assessed valuation in Elgin is $253,000, Jungo said. A home valued at that amount would be taxed an additional $150.03 a year, or $12.50 a month, he said.

A taxpayer with a home or property assessed at $300,000 would pay an additional $180.83 per year, or $15.07 per month, Jungo said.

Property owners whose home or building is assessed at $400,000 would pay an additional $246.35, or $20.53 a month, Jung said.

“I like to call this a ballpark estimate,” Jungo said.

While real estate websites show homes are selling for about $300,000, Jungo stressed the amount of taxes property owners pay is based on the assessed valuation.

“The (housing) market has been crazy the last few years,” Jungo said. “I honestly don’t know what it will be for 2025,” he said.

Elgin’s portion of the tax bill is a fraction of what other taxing bodies charge, Jungo said. School districts take the largest chunk of property taxes, and those taxes vary from district to district, he said.

The 2024 property tax levy generated $57.9 million for the city, said Debra Nawrocki, chief operating officer. The tax hike would generate $65.6 million in property taxes, she said.

“For 11 years, this organization has expanded and operated with the same flat level of revenue during that time period. All good things have to come to an end,” City Manager Rick Kozal said. “It is with great debate and deliberation that this recommendation for this modest increase was coming,”

City councilwoman Tish Powell asked whether increasing the sales tax would be an alternative to increasing the property tax. Elgin is a home rule community, which means it can increase the sales tax.

Staff will be providing information about the sales taxes and whether increasing them could be an option to avoid a property tax increase.

Councilman Corey Dixon floated the idea of having a property tax freeze for seniors. U.S. Census data showed that 20% of Elgin households are headed by a senior citizen.

“We are having a very difficult time in our country. Everything is going up,” Dixon said. He wanted to talk about the idea of a tax freeze to help “the most vulnerable population” in the community, who may be on a limited income, he said.

Councilman Anthony Ortiz said there are other vulnerable populations, like veterans, who may need help.

“My larger point is we may have an opportunity to provide some relief to what we know to be a vulnerable population, not saying it’s the only one. It’s an option,” Dixon said.

Mayor Dave Kaptain said the council needs to be mindful about providing tax relief.

“Who do you hurt and who do you help?” he said. “You are going to help some people, and you are going to hurt others.”

Kozal said the city’s biggest expense is personnel. If the council wants to make significant cuts, it would need to take people off the payroll, he said. But that type of cut could affect city services or initiatives, he said.

“We thought the property tax increase, rather than going to other revenue sources, would be the most efficient and economic way to begin to recover what is needed…to maintain the level of city operations,” Kozal said.

But, “we’re hearing the direction of the council, and at the next meeting we will be able to come back with proposals for what other revenue streams could be looked at for potential increases to fill that gap,” Kozal said.

Those other revenue streams include the electricity tax, motor fuel tax, and a possible new online streaming tax.