McHenry County finance officials present two levy options as committee weighs look-back, abatement and cuts

McHenry County officials presented two alternate approaches to next year's property-tax extension and asked the Finance & Audit Committee to send both to the Committee of the Whole for formal consideration.

Staff recommended presenting (A) a look-back that would reestablish a higher levy base (the packet cited a hypothetical extension near $73.8 million) but include a proposed abatement of $3.2 million to reduce the immediate homeowner impact, and (B) a more conservative option that uses the current base plus CPI and new growth (a smaller annual homeowner increase). Committee members asked staff to prepare both scenarios and to show the multi-year consequences for reserves and months of operating coverage.

Treasurer Donna Kurtz and county finance staff highlighted why the two scenarios matter. Kurtz noted that the county's month-end cash balances and investment income have fallen and that continued use of fund balance for recurring expenses risks eroding reserves, reducing investment income and, over time, damaging the county's high credit rating. "I'm a simple person. I do not have the complex knowledge ... I'm just looking at money in the bank," Kurtz said, adding that a sustained draw on reserves could become permanent if structural revenue gaps are not closed.

Staff's analysis showed that modest increases now produce materially different three-year trajectories. Under the CPI-plus-new-growth-only option, the general fund's months-of-reserve would remain near five to six months in the short term but the longer-term outlook worsened without further adjustments. The look-back plus a $3.2 million abatement reduced near-term homeowner impact to about $39.81 for the "average" home value cited in staff materials and materially slowed projected draws on reserves in fiscal 2027's forecast.

Committee members debated several possible one-year reductions that could raise the abatement or reduce next year's levy: shifting up to $500,000 per year from the county's RTA sales-tax fund to general abatement (committee members considered moving a portion of squad car replacements to RTA and reducing RTA bridge/match allocations); a temporary hiring freeze on currently vacant general-fund positions; and other targeted program reductions. Members also discussed whether such moves should be treated as one-year measures or permanent changes.

The committee took a straw poll of members present to gauge support for preliminary ideas. Members asked staff to prepare the two levy scenarios including: projected levy extensions, the fiscal impact on months-of-reserve and special funds like FICA and IMRF, and the effect of a menu of potential one-year reductions. The committee will consider the scenarios and any recommended cuts at upcoming Committee of the Whole and full board meetings.

What the committee decided - Action: Staff to prepare two levy scenarios for Committee of the Whole: (1) look-back reset with proposed $3.2 million abatement and (2) CPI-plus-new-growth option using current base. Staff to demonstrate multi-year impacts and show consequences of proposed one-year reductions.

Why it matters The decision frames the county's fiscal path for multiple years: a look-back raises the levy base now and improves multi-year reserve outcomes (but increases the tax base this year); the CPI/new-growth option keeps a lower base but requires greater cuts later or increased reliance on fund balance. Treasurer Kurtz warned that persistent use of reserves could force permanent disinvestment and hurt the county's credit profile.

What remains unresolved The Committee of the Whole must weigh the scenarios and decide whether to set a new levy base, how large an abatement (if any) to apply, and which one-year reductions to adopt. Any chosen construction of the levy will return to the board for formal adoption.

Speakers quoted (selected) - Donna Kurtz, McHenry County treasurer: "I'm a simple person. I do not have the complex knowledge ... I'm just looking at money in the bank." - Carrie (budget staff): "If you take the base of 65 and add CPI and new growth, the levy amount would be the 67.7."

Actions