With No Property Tax Referendum, What Can the Cook County Forest Preserve District Do to Address Financial Needs?

November 21, 2019

Now that the Cook County Forest Preserve District’s $124.7 million budget has been approved without the help of a referendum to increase property tax revenue, Forest Preserve District Commissioners acknowledge that the District’s serious financial challenges need to be addressed over the next year.

A proposal for a countywide referendum that would have asked voters on the March 2020 primary ballot whether they supported a property tax increase was scrapped without a board vote after Forest Preserve District Board President Toni Preckwinkle came out against it, saying now is not the time. The property tax increase would have been intended to help the Forest Preserve District stabilize its pension fund, address capital needs and work toward the goals of the Next Century Conservation Plan.

The Civic Federation has long recommended that Forest Preserve District establish a separate governing board from that of Cook County. The two entities, though they are separate units of government, share the same Board of Commissioners, which creates an inherent conflict of interest and inhibits the amount of attention and oversight paid to the Forest Preserve District. Creating a separate board for the Forest Preserve District would allow the governing board to focus its attention full-time on the mission of the Forest Preserves and addressing the Districts financial challenges. State legislation to create a separate board was introduced in 2010 but did not pass.

According to the Forest Preserve District’s FY2020 budget, the District needs to contribute an additional $9.2 million annually to its pension fund over the next 30 years in order to pay down the pension deficit. Currently the District contributes $4 million based on State statute. Without a change in funding contributions, the pension fund is estimated to run out of money by 2037. The District has a $130 million capital needs backlog, of which $30 million are urgent needs such as roof replacements, parking lot repairs and boiler replacements. In addition to pension and capital funding needs, the District is five years into an ambitious land conservation plan that is estimated to cost $2 billion over 25 years through 2040, though the District does not have a funding source to implement most of the plan. Approximately 85% of the total is related to land acquisition costs.

In an effort to address these challenges, the Forest Preserve District in recent years has pursued cost-cutting options, such as eliminating vacant positions and outsourcing aquatic centers, along with revenue-generating options, such as monetizing assets including cell towers and billboards and increasing activity and rental fees. The District says all easy options have been tapped, which leaves only difficult options remaining.

The Forest Preserve District has limited revenue-raising options because it is funded primarily through the property tax, which is capped by the Property Tax Extension Limitation Law (PTELL). This means the District is limited to raising its property tax extension by 5.0% or the rate of growth in inflation, whichever is less. In the low-inflation economy of the past several years, this has limited the District’s property tax revenue growth to around 2% or less while costs have increased at a faster rate. The District is also limited in the other taxing options it has as a non-home rule government entity. Therefore, non-tax revenues such as permits and fees are the District’s only other major revenue option. 

The Forest Preserve District also provides a tax subsidy to the Brookfield Zoo and Chicago Botanic Garden, both of which are housed on Forest Preserve land. The Zoo and Garden collectively will receive $22.5 million of the District’s $96.8 million net property tax levy in FY2020.

The referendum reportedly would have increased the Forest Preserve District’s property tax rate by 0.025 percentage points, which was estimated to generate an additional $42 million. In 2018, which is the most recent property tax data available, the District’s total tax rate was 0.060%, so the levy would have increased by nearly 50% if the referendum had been approved by voters. At the November 19, 2019 meeting during which the Board of Commissioners adopted the FY2020 proposed budget, some Commissioners expressed their concern about the District’s financial condition and continued interest in a referendum to increase the property taxes or pursuit of other options.

In the absence of a voter referendum for a property tax increase, what other options does the Forest Preserve District have? The following are several potential paths. It should be noted that the following options are intended only for informational purposes. The Civic Federation has not taken an official position on any of the following ideas in the abstract and without being tied to a financial plan.

  • Cook County could share a portion of its sales tax revenue with the Forest Preserve District. In 2016 Cook County increased its sales tax by one percentage point from 0.75% to 1.75% and dedicated the revenue from the 1.0% increase primarily to fund the Cook County pension fund. The County could share a fair portion of the sales tax revenue with the Forest Preserve District to help it make the actuarially necessary contribution to the pension fund and prevent its insolvency.
  • Further, Cook County and the District should consolidate the Forest Preserve District pension fund into the Cook County pension fund. Cook County would then assume the liabilities and payments to Forest Preserve District employees’ pensions. Merging the funds would require a change in State statute.
  • The Forest Preserve District could pursue a property tax levy rate increase in Springfield. There are two ways the Forest Preserve District could receive an increase to its capped property tax rate: voter referendum or a change in State law. As a recent example, Chicago Public Schools received authorization through State law (the evidence-based school funding formula, Public Act 100-0465) to increase its property tax levy dedicated to teacher pensions from a rate of 0.383% to a rate of 0.567% following the reinstatement of a levy outside of PTELL specifically for funding the Chicago Teachers’ Pension Fund in FY2017.
  • The Forest Preserve District could make major cuts or sell assets. This option is not ideal because significantly reducing programs or spending on land restoration could result in fewer visitors and therefore less fee revenue. The Forest Preserve District could reduce or even eliminate the tax subsidy provided to the Brookfield Zoo and the Chicago Botanic Garden, but those nonprofit entities would then face difficulties in making up the lost revenue. The District could also sell its pools or golf courses. Or it could sell land, though this last option would run counter to the District’s mission.

As the District continues to examine its options, the Civic Federation looks forward to seeing additional proposals made by the Forest Preserve District Commissioners and President.


Related Links:

What is a PTELL Referendum and How Does it Work?

Forest Preserve District of Cook County FY2019 Executive Budget Recommendation: Analysis and Recommendations

Separate so they can be Equal: The Case for Creating a Separate Board of Commissioners for the Forest Preserve District of Cook County