Residents in Jacksonville may see an increase in their property tax bills next year. Last night, the Jacksonville City Council voted 8-2 to raise the city’s levy by 3.5 percent. This was the first reading for the increase, and it will be voted on again at the remaining meetings this year.
Unsurprisingly, growing pension costs were cited as the main driver of the increase. Pensions were up $364,000 this year. 2.4 percent of the 3.5 percent increase was necessary just to cover the police and fire pensions. New actuarial data has driven up the projected costs of the pensions; and this trend is expected to continue for the next several years.
The council also pointed to the compounding effect of levy increases as a reason for the increase. Jacksonville, like other home rule units, has a five percent cap on the annual increases for their levy. Every year the levy is less than the cap, the next year’s levy will be smaller that it could be. “We’ll never get that money back,” was a common refrain among the supporters for a higher levy.
Not everyone agreed with this logic. Alders Steve Warmowski and Mike Wankel voted against the increase. Warmowski said later that any money the city “loses” stays in the hands of residents.
Just one slice of the property tax pie
But the council stressed that this was not a 3.5 percent increase to property tax bills. Many different taxing bodies contribute to the property tax bill. In Jacksonville, the school district accounts for almost two thirds of the bill. The city is only 22 percent. The remaining portion is spread among many other bodies, including the county, airport, and community college.
Property taxes are also a set dollar amount in total, not per unit. Once the levy is set, every property pays its proportional share of the bill. That means growth in the community can mean a lower property tax bill for everyone, even if the total levy has gone up. Jacksonville grew by .4 percent last year, so even the 3.5 percent increase for the city’s portion will be slightly lower than 3.5 percent.
Residents who want to weigh in on the proposed levy increase can attend the remaining meetings this year, which occur on the second and fourth Monday’s of the month.
The council was also briefed on a potential archeological survey needed for a water improvement project. Much of the city’s water comes in on an aging pipeline. To increase the lifespan of this vital piece of infrastructure, the water department wants to install a surge suppression unit, that will keep the pressure more even in the pipeline. However, the only place the unit can be installed is in an active archeological area.
To protect the area, a survey will be necessary. Archeologists from the University of Illinois will be brought in to sweep the area. Their project will be expensive, and may cost over $59,000. To further complicate issues, if a major discovery, such as a burial site, happens on the last day of the survey, not only will the city have spent all of the initial money, the whole project would be delayed. While this is unlikely given the current assessment of the area, it did make the council more cautious about the survey.
But the cost of not adding the surge suppression unit was seen as a worse option. Replacing or overhauling the decades-old 30 inch pipeline will be a serious undertaking. Paying a small amount now to extend its lifespan was seen as the best option.
You can watch the workshop session and the chamber session in the players above and below.
Golf revenue continues to fall in Jacksonville
2018 was another bad year for the Jacksonville’s Links golf courses. Like most municipal golf courses, the Links loses money every year. It was clear as early as August that 2018 was going to be a particularly bad year for the courses. The recently released 2018 audit shows just how dire the situation is becoming for the courses.
Total operating losses totaled $198,000. This is nearly triple the losses suffered in 2012. Expenses were up eight percent since ’12. The real driver is that revenue is down 24 percent, from $377,000 in ’12 to just $288,000 last year. This is why the cash infusion from the city came much earlier in the year; the Links was struggling to cover payroll expenses due to low revenue. And unlike in years past when the bailout is needed in the winter months, last year the Links needed help during the fall.
Fixing the root problems at the course will not be easy. Golf participation is declining nationally, and Jacksonville has not been spared from these trends. But the first step is admitting there is a problem. A golf advisory committee was created in February 2018 and they did provide some good recommendations for improvements. But their last meeting was more than a year ago. In full council meetings, council members are reluctant to even acknowledge that revenue is down substantially from years past.
Six-figure losses are the new normal for the Links. It is up to the council to decide if they want to continue to write these losses off, or come up with a more sustainable plan for the courses.
You can read the full audit here.
Local Airbnbs to City Council: let us pay taxes
Who wants to pay more in taxes? Normally, business owners point to Illinois’ high tax burden as a problem, but some property owners in Jacksonville actually want to be allowed to pay more. One of these owners is E. Scott DeWolf, who runs an Airbnb location in Jacksonville. But when DeWolf went to the city to voluntarily pay the hotel motel occupancy tax, he was told he wouldn’t be allowed to do so.
Airbnb is a short-term rental service where property owners can rent out rooms or buildings that they own. DeWolf was joined by Professor Kevin Klein and Bryan Leonard to discuss the positive impact Airbnb has had on the local tourism environment. They shared how the experience they can create in their properties fills a niche that regular hotels don’t, and that this draws visitors from across the state and even some from over seas.
However, despite being an internationally recognized brand, Airbnb still operates in a legal grey area. Listings aren’t considered rental properties, because visitors have short stays like at a regular hotel or bed and breakfast. But they aren’t recognized as hotels either because they are otherwise residential properties. As a result, since the start of Airbnb, taxation has been an issue. While Airbnb has taken some voluntary steps to collect the occupancy tax, this collection has varied from jurisdiction to jurisdiction. To further complicate matters, not every area wants Airbnb to operate there. Adding new rooms may impact the viability of existing hotels, and adding new traffic to residential areas can disrupt neighborhoods. In Jacksonville’s case, Airbnb is not recognized as a hotel, which is why they cannot pay the local occupancy taxes.
It may seem strange that Airbnb operators would want this to change. Why ask the council to raise their taxes? There is a very pragmatic reason: if Airbnb locations do not pay the occupancy tax, they cannot advertise with the local tourism boards. This keeps them out of some of the main local referral networks. They cannot even leave brochures with the tourism board.
But their request is also driven by a genuine commitment to the community. These owners have heavily invested in building up their properties and enhancing local tourism. And adding more rooms is necessary for Jacksonville’s busiest tourism days. When sporting events take place, or the college host graduation, visitors often have to room as far away as Springfield or Lincoln. Building up a healthy community is good business for everyone.
In the mean time, DeWolf said that they were still willing to contribute to the community even if they cannot pay taxes directly. He personally offered to donate 5% of his sales, equivalent to the tax he can’t pay, to the Jacksonville Heritage Culture Museum.
You can watch their full presentation in the player above, and the rest of the city council meeting below.
Integrated Resource Plan recommends shift towards renewables
What does the future hold for CWLP? Currently, four coal-fired Dallman units provide almost all of Springfield’s power. But that may change soon. At the Monday meeting of the Public Utility Committee, experts from The Energy Authority (TEA) unveiled the results of their months-long integrated resource plan (IRP), which called for major changes to the utility.
The IRP is based on economic models. Energy markets are impacted by many different factors, including the price of fuel, government regulations, market demand, and even the weather. It is impossible to know how the future will play out, but by running many scenarios, TEA was able to come up with recommendations that fit the most likely futures. By 2031, power generation will be evenly split between renewables and coal (53-43), up from the current 100 percent coal generation. Improvements to energy efficiency will account for the remainder.
Phasing out coal
Coal will play a much smaller role in CWLP’s future. Every scenario called for retiring Dallman units 1 and 2. These units should be retired in the next few years; possibly as early as 2020. Additionally, Unit 3 was also recommended to be retired. However, because of the logistics of the plants, unit 3 will take longer to decommission.
This recommendation was based on the economics of coal. Kevin Galke, who presented for TEA, said that fracking was a “game changer” for energy markets, and one that no one saw coming. At the same time, renewable energy has also become substantially more competitive. This combined with the high capital expenses at the units, made them economically unviable.
But coal is not totally eliminated from the portfolio. Unit 4 is expected to provide energy for the city for at least the next decade. Its ultimate fate depends in large part on the price of coal. If the city can keep coal costs low, unit 4 remains much more viable than if prices continue to climb. However, in the event its capacity needs to be replaced, a gas plant is a more likely choice than a new coal one.
Adding in renewables
Renewables are the source of choice to replace coal. TEA acknowledged that many renewable projects in the past had been motivated by social consciousness rather than economics, but that new technologies were changing that landscape. Under the TEA plan, renewables will account for nearly half of the city’s power by 2023 and into the 2030s.
The transition from the Dallman units to renewables will be facilitated by a few years of heavy market purchases. But after the transition is complete, the city should return to being a net seller of energy.
What comes next
The IRP was just the first step in creating the future of CWLP. Now that the city knows what direction it needs to go, the task of implementing this plan will fall to the city council. Their task will not be easy. Taking coal plants offline is in many respects just as hard as building them, due to the complicated machinery and environmental issues with coal waste. And although CWLP may be eligible for certain Future Energy Jobs Act (FEJA) grants, creating the renewable capacity will also require significant planning.
But there is also a human element to CWLP. The three units recommended for retirement employ a large number of workers directly, and supports the coal mines and trucking companies that keep the units fueled. Even if this move is the right one for CWLP and the city as a whole, many people stand to lose their current employment. The council acknowledged that they will have to find a way to transition these workers to other jobs either in the utility or in the private sector. They cannot simply be abandoned with no plan.
In the mean time, the public comment period for the report is now open. The public is invited to comment either by email to IRP@cwlp.com or by mail to CWLP General Office, 4th Floor, Attention IRP, 800 East Monroe St, Springfield IL, 62757. There will also be an open house May 20th at Lincoln Library from 5:00 to 7:00 PM.
To learn more about the IRP, you can visit CWLP’s website, or watch the live presentation in the player above.