A series of new and increased taxes and fees, together with personnel and program cuts approved by City Council on Feb. 9 and 11 have brought the proposed hike in the City’s portion of the property tax somewhat below 10 percent. Some aldermen have said they would like to cut even more programs and services. Others have called upon not-for-profit organizations – “those who can,” said Fourth Ward Alderman Steve Bernstein – to contribute to Evanston coffers.

For now, the elm-tree-injection program and the two branch libraries are safe from the budgetary chopping block. However, aldermen have until March 1 to approve a balanced budget.

Pension Mess

The debate on how to address the City’s unfunded liability to the police and firefighters’ pension funds continued. Figures from the City’s new actuary show the present liability was about $140 million as of March 1 of last year. By law the City must make up the shortfall and continue to make the actuarially required contribution (ARC) each year so that both pensions are fully funded by 2033.

The required payments to the pension funds are responsible in large part for the budgetary problems this year, City Manager Julia Carroll has said.

Council members have agreed that Mayor Morton should appoint a blue-ribbon panel to investigate the genesis of the pension problems and come up with long-term solutions. That committee is said to be forming.

Ald. Bernstein said, “The blue-ribbon panel will deal with the validity of the actuarial assumptions [used in estimating the $140 million shortfall]. If they are valid … we have to deal with paying the pension obligations. A few months ago we were told that the world is flat; now it’s round.”

Alderman Lionel Jean-Baptiste, 2nd Ward, asked his colleagues to consider postponing paying the ARC until perhaps 2016, when the City had retired some of its debt. Ms. Carroll said, “We have to pay the actuarially required amount.” Ald. Tisdahl added, “[Not paying] is how we got into this mess.”

Alderman Cheryl Wollin, 1st Ward, said, “It’s dangerous not to pay what we owe.”

Alderman Delores Holmes, 5th Ward, said, “Alderman Jean-Baptiste is asking us to think outside the box.”

Ald. Bernstein added, “We have to understand that we are pricing people out of the community. … If the pension numbers are accurate, we have no choice.”

Mayor Morton said, “The mayors of the Northwest Municipal Conference want the legislature to come up with something new. The question [of the pensions] is a rough one, and I think it put me in the hospital. … There are foreclosures everywhere, and Evanston is not exempt. What are those people to do? What can we do so that all of us can live? Are the people who have to sustain an increase in taxes – can they sustain their homes?”

Opposition to Prepared Food and Beverage Tax

Neither residents nor Council members appear to be happy with proposed ways to resolve for next year the enormous shortfalls created by the City’s heavy debt and its pension obligations. Both the aldermen and the Mayor appeared to favor increasing several taxes and fees, as well as implementing new ones, over using the property tax as the primary vehicle to fund most of the obligations.

Commenting on the failure of the Feb. 5 City-sponsored referendum to increase the real estate transfer tax, Mayor Lorraine Morton said, “When the community did not vote for the referendum, it told us how the community felt about taxes and the raising of taxes.”

Alderman Elizabeth Tisdahl, 7th Ward, said, “I agree with you completely that a huge property tax makes people leave.”

Not all citizens appeared to agree with that approach. Several local restaurateurs came to the budget workshop to oppose the proposed 1-percent tax on prepared food and beverages. Although the ordinance would not increase the liquor tax, those who opposed it said Evanston’s taxes are already so high as to make it nearly uncompetitive with restaurants in nearby towns for the catering and banquet clientele.

Owners or managers of nearly all the locally owned downtown restaurants said they felt they would lose customers if the food and beverage tax were implemented.

Joel Fondell, manager of Le Peep restaurant, said he opposed the proposed tax. “We already pay for a business license, [and pay] taxes on the awning, fees for stickers and for our neon signs and outdoor seating. We also pay electricity, phone, natural gas, water, sewer, Social Security, liquor and sales taxes. Is there any industry that is taxed as high as restaurants?”

Other local restaurant owners and operators who said they oppose the tax include Jeff Muldrow of Va Pensiero, Scott Anderson of the Clean Plate Club, Patrick Breslin of the Celtic Knot, Dan Kelch of Lulu’s and Russ Abels of Hotel Orrington. “We can pass on only a certain amount of our costs,” Mr. Muldrow said, adding Evanston already has the highest liquor tax around. “Evanston cannot tax restaurants continuously,” he said. “I feel I’m being driven out.”

Mr. Breslin said, “With this proposed tax and other proposed fees, we feel less and less welcome in Evanston. If the plan is to squeeze us out, I ask that you be up-front about this so we can prepare our loyal customers.”

The real problem, said Mr. Muldrow, Mr. Abel and others, is in the banquet and catering aspects of their business. Nearby communities such as Skokie and Wilmette can offer the same or similar packages at a lower price because of the lower taxes there.

Jonathan Perman, executive director of the Evanston Chamber of Commerce, presented figures showing that Evanston’s effective tax rate – that is, the rate of the levy when triennial assessments are comparable – is lower than it was in 1999 and is lower than those of several surrounding communities. Saying that an additional $500 on a $10,000 property tax bill was preferable to the proposed food and beverage tax, he urged Council members to increase the property tax rather than implement the food and beverage tax.

The proposed prepared food and beverage tax will be considered by the Council on Feb. 25. Council members have said they would direct the revenue generated by this tax to the firefighters and police pension funds.

Tentatively Approved Fees

Aldermen held three proposed revenue-generating ordinances in committee, with the understanding that they would be approved for the 2008-09 budget. The ordinances will increase ticket and towing prices during snow emergencies; impose a licensing fee for all Evanston businesses, including home-based businesses; and implement a licensing requirement and fee for rental units.

The business licensing ordinance was held in committee, because aldermen wished to learn how many businesses are exempt, how many that are not now licensed could be licensed and how many home-based businesses there are in Evanston.

The rental-unit licensing program could garner the City more than $400,000. And, said Community Development Director James Wolinski, the ordinance would help address non-compliance with City standards.

Jim Schermerhorn of Schermerhorn Realty Management in Evanston, and Mary Monaghan, who said she represented an association of rental property managers, both said they felt the proposed fee – $40 per rental unit – was excessive and that the rental-unit licensing ordinance as proposed might not accomplish its goals. Aldermen for the most part appeared to favor the ordinance; their referral back to committee was to clarify the section of the ordinance dealing with the appeals process.

Proposed New and Increased Fees

At the Feb. 11 City Council meeting, aldermen approved for introduction several increases in taxes and fees that will be up for a final vote at the Feb. 25 Council meeting. They include the following:

A 1-percent tax on prepared food and non-alcoholic beverages

An increase from $250 to $500 for the retail tobacco vendor license fee

An increase from $82 to $100 for temporary food establishment licenses

An increase from $36 to $50 for licenses for food-delivery trucks

An increase in the price of vehicle stickers from $60 to $75

An additional charge of $2.50 per month for pick-up from a second garbage cart

An increase of 25¢ per hour – from 50¢ to 75¢ – in the downtown parking meter rates

An increase of 1¢ per gallon – from 2¢ to 3¢ – in the motor fuel tax

A new sliding-scale fee for historic preservation review

Several items were held in committee and will be considered at the Feb. 25 meeting.

Cuts to Programs and Personnel

At the budget workshop on Feb. 9 aldermen agreed to cut the funding to the City’s mental health board by 10 percent, or about $86,000. They also cut one part-time bus driver position for the City’s Levy Center bus, which ferries seniors to the Levy Senior Center on south Dodge Avenue and also takes school children to various after-school programs. Doug Gaynor, superintendent of Parks/Forestry and Recreation, said cutting the position would not interrupt those services, because stops would be consolidated. A part-time office position at the Noyes Cultural Arts Center was also cut.

Council agreed to continue the now-vacant position of victim services advocate but cut the vacant youth advocate position and the division chief in the health department. Evonda Thomas, director of Health and Human Services for the City, said the division chief had been chief of the clinic services, and most of the other duties would be folded into other department positions as she reorganized the entire division. Most of those services were discontinued by last year’s budget cuts.

Harvey Saver, assistant director of mental health services for the City, has announced his retirement. Aldermen also agreed not to fill that position but to create a new lower-tier position to manage the services Mr. Saver now oversees.

Off the Table

Without comment at the beginning of the Feb. 9 budget workshop, aldermen agreed to remove the elm-tree inoculation program and the two branch libraries from the endangered-program list and keep them as ongoing City programs.

At the Feb. 11 Council meeting, they also removed from consideration a yard-waste sticker proposal that would establish a charge for the collection and disposal of yard waste. Alderman Anjana Hansen, 9th Ward, requested that the proposal be removed and Alderman Ann Rainey, 8th Ward, seconded the motion, saying she thought no one would purchase the stickers and the leaves would not be collected. “The streets will be full of leaves,” she said.

A Tally

Assuming no changes in projected revenues and expenses: Adding all the proposed increases in taxes and fees, with the proposed new taxes and fees and then adding in the savings due to proposed cuts in programs and services leaves an increase of less than 10 percent in the City’s portion of the property tax. Or maybe not.

Next Steps

Council members will hold another budget workshop at 9 a.m. on Feb. 23, just two days before they are scheduled to approve the 2008-09 budget. If approved, the prepared food and beverage tax will become effective on April 1. The vehicle sticker increase will be effective with the 2009 stickers; all other ordinances will become effective once they have been approved by City Council.