Palatine Slams Unfunded Mandates, Warns of Cuts, Possible Tax Increases

Palatine is cautiously contemplating its financial future as it looks at the cost of unfunded mandates by county, state and federal government.

At the village council meeting Monday, Mayor Jim Schwantz warned cuts to village services and personnel or a substantial property tax levy increase will be inevitable if costly government mandates are not rolled back.

“It is not only what is facing us today but what we will be faced with in the future,” Village Manager Reid Ottesen said. “It is important to send the message that if it’s the local’s money, it needs to stay local.”

Palatine officials believe local control over some issues would result in large cost savings. In other instances, they believe reform is needed at the state level.

Schwantz said now would be the time to reach out to state lawmakers such as Rep. Tom Morrison, R-Palatine, or Sen. Matt Murphy, R-Palatine, before more budget cuts or a tax increase becomes necessary.

Among the unfunded mandates are the JULIE program, which provides for safe digging by marking underground utilities. The program costs the village $98,600.

Police traffic stop compliance mandates come at a price tag of $63,117 yearly. Officers are required to capture information about who they stop to avoid racial profiling.

“Things like this are not left to local municipalities, and we can handle them at much less cost,” Ottesen said.

Palatine picks up the $300,000 tab for health inspections required by Cook County. Ottesen said in other counties, the county health department takes on that responsibility.

An additional $81,720 is paid out for public safety benefits. 

“We are obligated to continue to pay benefits for public safety workers injured in the line of duty, and if they can’t come back, we pay their benefits for the rest of their lives,” Ottesen said.

Even if individuals are able to find a new job with benefits, the village is still required to cover their benefits.

“This is one of the many mandates that need to see change,” Ottesen said.

Social security contributions for police and fire, which are matched by the village, is another area Ottesen said could change.

“They pay in to the pension system and social security; we think they should be out of that, and if they were, there would be a $1.5 million reduction in property taxes,” Ottesen said.   

Workers compensation comes at a cost of $750,000, another area that Ottesen said is in need of reform. 

“It’s not that we are being hit with new mandates each year, many have been around for the last five to ten years; what we are saying is it’s time to take a
closer look and determine which could be shifted locally or eliminated all
together,” Ottesen said.

Although Palatine's obligations hold steady or rise, revenue has falled in some areas.

Sales tax and motor fuel tax revenues have each dropped by more than $1 million, and state revenues on the whole sand from $17.25 million in 2008 to $15 million in 2010.

“These costs have been passed along with no consideration for economic conditions; we’ve continued to make cuts, eliminate programs and people,” Ottesen said.

To add to the burden, the state is $1.35 million behind in payments that are due the village. Other ongoing issues identified were the need for true pension reform and changes in Medicaid. 

“It’s cuts or property taxes, at the end of the day, and when does it stop?” Scott Lamerand, District 2 councilman asked.  “The buck stops with the taxpayers because they are the only place to go when there are needs.” 

Despite all the negative news, Lamerand said the village fund balance is healthy, the bond rating is good and infrastructure needs are being addressed.

Looking forward, the village’s budget approach will include reviewing all expenditures and revenues, establishing a property tax levy to represent a balanced budget and continual debate on any and all costs to the village.