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A Motion to Discuss the Proposed Tax Levy Policy, Provide Feedback, and Recommend that the Policy Be Forwarded to the Village Board for Consideration
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Introduction
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The Finance Committee is asked to review the proposed Tax Levy Policy, provide feedback on the proposed planning framework, and recommend whether the policy should be forwarded to the Village Board for consideration.
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Recommended Action
Discuss the proposed Tax Levy Policy, provide direction to staff on any revisions, and recommend that staff bring a revised policy forward to the Village Board for consideration.
Prior Board Action
The Finance Committee has discussed the development of a formal property tax levy policy at two recent public meetings:
• July 9, 2024 (ID 24-334): The Finance Committee held an initial discussion regarding a proposed Property Tax Levy Policy and the development of a formal framework for determining the Village’s annual property tax levy.
• July 30, 2025 (ID 25-437): The Finance Committee reviewed a revised proposed Property Tax Levy Policy, discussed the process for developing the annual levy recommendation, and provided feedback before the policy was advanced to the Village Board.
Following the July 30, 2025 Finance Committee discussion, the Village Board adopted the prior Property Tax Levy Policy on August 5, 2025, as part of MOT 25-226. The current proposed Policy builds upon and updates that earlier work. Separately, the Village Board has historically considered and adopted the annual property tax levy through individual levy ordinances.
Background
Property taxes are one of the Village's major recurring revenue sources and support core municipal operations, Police and Fire pension obligations, debt service, and the Oak Park Public Library. The annual levy decision must balance the cost of maintaining baseline services and meeting legal and contractual obligations with Board goals, priority projects, long-term financial stability, and the effect on taxpayers.
The Village Board has generally used approximately 3% levy growth as a planning practice. However, the individual levy components can change at different rates, and new recurring commitments can create pressures beyond the cost of maintaining the existing service baseline. The proposed policy formalizes a consistent and transparent framework for evaluating these factors each year. It does not establish a legal tax cap, create an automatic tax increase, authorize spending, or limit the Village Board's annual discretion.
Under the proposed framework, management would prepare the 3% increase as the baseline planning case and use the greater of 5% or CPI as the normal planning ceiling. The annual recommendation would separately identify the four primary components of the Village-wide policy levy: Corporate Operations, Debt Service, Police and Fire Pensions, and the Library. At least three levy scenarios would be presented so the Board can evaluate the service, financial, and taxpayer effects of different choices.
The baseline is intended to align recurring property tax revenue with the recurring cost of the Village's existing level of services. Added pressures would be identified separately, including pilot programs, new or expanded programs and positions, new Village grants or increased funding for external partner agencies, and other services that become ongoing after fund balance, grant proceeds, or another one-time source ends. Incremental debt service associated with the Village's financing plan would also be shown separately. For each added pressure, management would identify a recurring funding source, an offsetting reduction, phasing, or the amount that would need to be supported by the levy.
The proposed policy also requires a five-year forecast, a ten-year levy history when available, estimated impacts on representative properties, disclosure of one-time revenues used for recurring services, and separate schedules for external partner agencies and Special Service Areas. These requirements are intended to give the Board and community a clearer explanation of what is included in the annual levy and why.
Timing Considerations
Finance Committee feedback on August 6, 2026, will allow staff to revise the proposed policy before it is presented to the Village Board. Advancing the policy during the FY2027 budget process would allow the framework to inform development of the 2026 property tax levy, which will be collected in 2027.
Financial Impact
There is no immediate budget impact associated with this item. The proposed policy does not set the annual levy amount or authorize an expenditure. The financial impact of the property tax levy will continue to be determined annually through the budget and levy processes, based on the levy components, service requirements, Board priorities, and the Village Board's final direction.
Operations Impact
Implementation would be led by the Finance Department as part of the annual budget and levy development process. The policy requires additional scenario analysis, forecasting, taxpayer-impact estimates, and coordination with departments, the Library, pension funding requirements, debt schedules, and external partner agencies. This work is expected to be incorporated into existing Finance Department responsibilities, and no additional staff positions are requested as part of this item.
DEI Impact
Property tax decisions can affect residents and businesses differently based on assessed value, property classification, exemptions, reassessment results, and household or business circumstances. The proposed policy supports a more equitable and transparent decision process by requiring estimated impacts on representative residential, commercial, and multifamily properties and by clearly distinguishing the cost of baseline services from new or expanded commitments. This information will help the Board consider affordability and service impacts, including for households on fixed or limited incomes, while recognizing that the policy itself does not determine an individual property owner's tax bill.
Community Input
There has been no community input given specifically in relation to the proposed Tax Levy Policy. The draft was shared with the Finance Committee on July 24, 2026, and the August 6, 2026 Finance Committee meeting will provide an opportunity for public comment and Committee discussion before any recommendation is forwarded to the Village Board.
Staff Recommendation
Staff recommends that the Finance Committee discuss the proposed Tax Levy Policy, provide direction on any revisions, and recommend that a revised policy be brought forward to the Village Board for consideration. The framework is intended to align recurring levy revenue with baseline services while ensuring that new programs, external commitments, and financing-plan costs are identified as distinct annual decision points.
Advantages:
• Creates a consistent annual framework while preserving the Village Board's authority to approve a levy below or above the planning range.
• Distinguishes the recurring cost of baseline services from new or expanded programs, partner-agency support, debt service, and other added pressures.
• Improves long-term planning by connecting the levy to the five-year forecast, pension requirements, debt obligations, Library needs, and Board goals.
• Improves public transparency through component-level scenarios, taxpayer-impact estimates, and disclosure of one-time funding used for recurring services.
Disadvantages:
• Requires additional annual analysis, coordination, and reporting by the Finance Department and participating agencies.
Alternatives
Alternative 1:
Provide feedback on the draft but defer a recommendation until a revised policy returns to the Finance Committee at a future meeting.
Advantages:
• Allows the Committee to review the exact revisions before deciding whether to recommend the policy to the Village Board.
• Provides additional time to address Committee questions/request supplemental analysis.
Disadvantages:
• Delays Board consideration and may reduce the policy's usefulness during the FY2027 budget and 2026 levy development process.
• Requires an additional Finance Committee agenda item to revisit the same policy.
Alternative 2:
Do not recommend advancement of a formal Tax Levy Policy and continue evaluating the property tax levy annually without an adopted planning range and reporting framework.
Advantages:
• Maintains maximum year-to-year flexibility without creating additional policy-based reporting requirements.
• Avoids the possibility that a planning range will be interpreted as a predetermined levy increase.
Disadvantages:
• Does not establish a consistent method for aligning recurring levy revenue with baseline services and legal obligations.
Provides less transparency about how new programs, partner-agency funding, financing costs, and one-time funding affect the annual levy recommendation.
Anticipated Future Actions
Staff will incorporate Finance Committee feedback into the draft policy and prepare the revised policy for Village Board consideration by resolution. If adopted, the Finance Department will incorporate the policy's scenarios and disclosures into the annual budget and property tax levy process and will review the policy annually for any legal, financial, or operational updates.
Prepared By: Louis Hall-Makarewicz, Deputy Chief Financial Officer
Reviewed By: Kevin Bueso, Chief Financial Officer
Approved By: Kevin J. Jackson, Village Manager
Attachment(s):
1. Proposed Tax Levy Policy
2. Current Tax Levy Policy
3. 2026.08.06_Finance Policy Revision Overview
a. Supplementary presentation for Finance Committee discussion of this and two other draft policies, in addition to an overview of policies under Finance review.
4. Finance Policy Framework Review_Draft
a. Comprehensive draft list of policies currently under review or development.