Worth trustees approve loan to cover for property tax funds due

By Bob Jaderberg

Worth will take out a loan of up to $1 million to cover for property tax revenues to be received from Cook County.

Continuing on a financial course of spending cuts and taking out loans to cover shortfalls trustees July 20 voted unanimously to adopt an ordinance authorizing the issuance of a tax anticipation warrant not to exceed $1 million.

“At this point, it’s what we need to do,” said village finance director Dwayne Fox. “We can’t operate without it.”

Fox said the warrant would be paid back just like the previous one.

A tax anticipation warrant is a loan issued in lieu of property tax dollars not yet received. It is repaid from the taxes levied for the particular fund against which they are issued, either upon their receipt or on a specified maturity date. Fox compared the warrant to a line of credit.

“We take out only as we need it,” he said.

The village has in the past estimated its needs and procured loans for the amount officials thought was needed. That amount was $500,000 last December and that loan has since been paid back.

Private Bank officials recently suggested a different approach — a two-stage loan program of automatically renewing annual warrants, Fox said. The first warrant for $500,000 comes due or matures in December 2010. By then, Fox expects Worth will have received approximately $1.3 million in property taxes from Cook County, sufficient collateral for the second stage of the loan, which renews when the first one matures. The total of the two tax anticipation warrants can not exceed $1 million.

The amount of the second loan depends upon how much is still outstanding on the first, Fox said. A November referendum to raise property taxes, if passed by voters, would also impact future loans and payments, Fox said.

“What we do take, I guarantee you — it’ll be because we need it,” he said.

Mired in a financial crisis that has resulted in a spending freeze, Worth officials continue to negotiate with labor unions for concessions that would amount to about a 10-percent salary reduction for village employees. Last month, two police officers and a part-time public works employee were laid off, and another officer and public works employee had their hours cut.

Mayor Randy Keller and Fox have both said publicly that the village can no longer afford to operate as it has in the past.

This is part of the July 29, 2010 online edition of The Reporter.

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