Arlington Heights relying on pot and reserves to avoid property tax hike

  • Arlington Heights officials are relying on a projected $500,000 in new annual revenues from Verilife, the marijuana dispensary on the south side of town, to help plug a hole in the 2021 budget that's been hampered by economic effects of the coronavirus.

      Arlington Heights officials are relying on a projected $500,000 in new annual revenues from Verilife, the marijuana dispensary on the south side of town, to help plug a hole in the 2021 budget that's been hampered by economic effects of the coronavirus. Mark Welsh | Staff Photographer, August 2020

 
 
Posted11/10/2020 5:30 AM

Despite the ongoing pandemic, Arlington Heights won't have to raise its property tax levy for the second year in a row, thanks at least in part to a new revenue source -- taxes from recreational marijuana sales ­-- and to reserve funds, officials said.

The expected $500,000 annual cash infusion from a new 3% local tax on cannabis sales comes after village trustees in August overturned their earlier ban on recreational pot sales. Under an 18-month pilot program, the Verilife dispensary at 1816 S. Arlington Heights Road is able to expand to general adult use sales from solely medical use sales.

 

During initial review of the proposed $192.5 million budget for 2021 Monday night, village officials also said they plan to take nearly $692,000 from reserves to balance a budget that's been hampered by the economic downturn.

A few months ago, officials thought they'd have to use $1 million more, but then they refined revenue projections and got better quotes on employees' health insurance.

At $28 million, the reserve fund represents nearly 40% of general fund expenditures, and the village's policy is to maintain at least 25%.

"These circumstances kind of validate that decision because we know there are times where we need to draw upon that, and this is one of those," Village Manager Randy Recklaus said.

Recklaus said the village is also holding 13 jobs vacant temporarily to reduce costs. But he didn't think the lower staffing would be sustainable, as demand for village services hasn't diminished, he said.

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Among other reasons the village is able to hold the line on property taxes, according to officials:

• In March, just as the pandemic took hold, they used last year's budget surplus to pay down a portion of police and fire pension liabilities.

• The village has lower annual debt service payments after selling new bonds.

• Bond proceeds and an increase in motor fuel tax funds from the state, tied to an increase in state gas taxes, are being used.

The 2021 spending plan proposes a host of public works projects, including $11.5 million to resurface or rehab streets, $7.3 million for stormwater control projects, and $4 million to replace old water mains.

The village represents 12% of an average homeowner's property tax bill, while schools encompass two-thirds.

The village board will continue its review of the proposed budget during another virtual meeting at 7 p.m. Tuesday, Nov. 10, with further examination of individual department budgets.

Final approval of the budget and levy is expected Dec. 7.

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