O'Fallon Progress

O’Fallon’s growing economy has helped keep property taxes low

Gary L. Graham
Gary L. Graham

Recently, the Belleville News-Democrat printed an editorial titled, “After 20 years, mayor leaves city ready to challenge the big kid.” If you have not read it already, I encourage you to do so.

The editorial stated, “O’Fallon has done an impressive job during Graham’s tenure. The city of 29,000 residents with a median household income of $79,800 has leveraged multiple interstate interchanges into sales taxes of $7.7 million of their $17.8 million general fund.”

I cannot take credit for O’Fallon’s success. O’Fallon is a beneficiary of good location, great residents and businesses, and a city council that all share a consistent vision and are determined to make O’Fallon great.

I want to emphasize the importance of some of the data that the editorial presented, it has already been mentioned, but I want to repeat it again: O’Fallon has leveraged multiple interstate interchanges into sales taxes of $7.7 million of the $17.8 million general fund. This means that in O’Fallon, sales tax pays for approximately 43 percent of the city’s general fund.

This is significant for two important reasons:

First, it means that the city of O’Fallon does not have to rely on property taxes in order to pay for the basic city services included in the city’s general fund, like police, community development, and streets. In fact, property tax in O’Fallon pays for only 2 percent of the city of O’Fallon’s total budget.

This illustrates the importance of growing O’Fallon’s economy and the impact it has on your property taxes. The more the economy improves in O’Fallon, the more sales tax collected. By continuing to grow O’Fallon’s economy and sales tax base, the city can further fund city services through sales tax, and not property tax.

Second, it means that the city of O’Fallon does not have to compete with O’Fallon’s other taxing bodies for funding. For every $100 in property tax an O’Fallon taxpayer pays, the city of O’Fallon receives only $10.40. This means that the other $89.60, or 89 percent, of a property tax bill each person pays, can be used by the other taxing bodies in O’Fallon, like O’Fallon Township and Road District, St. Clair County, and O’Fallon’s school districts, to pay for the services they provide.

These other taxing bodies, especially the school districts, have no other choice but to fund their services through property tax. So, by the city of O’Fallon relying on funding sources other than property tax, the need to pay for police and streets does not compete with the need to pay for schools.

According to a report produced by the Illinois Municipal League, the city of O’Fallon is below the state average in all revenue per capita categories (property tax, licenses, fees, state revenue), except for sales tax. O’Fallon is also below the state average in total expenditures per capita. Being below average in this instance is good; it means that the city of O’Fallon is able to provide quality services at a good value, and without having to ask for more from O’Fallon residents.

It has long been the policy of the city council to fund the budget from sales tax and other revenue sources rather than the property tax.

AA+ bond rating

Not only is the city of O’Fallon’s property tax revenues lower than the state average per capita, but O’Fallon’s ratio compared to the state average also decreased. In 2002, O’Fallon’s property tax revenue as a percentage of the average was 68 percent and by 2012 was only 53 percent. This means that over the years, O’Fallon is increasingly funding city operations by revenue sources other than property tax.

It is important that city officials are good stewards of taxpayer funds. In addition to staying below statewide averages in revenue, yet still providing outstanding services, the city of O’Fallon has a AA+ bond rating by Standard & Poor’s.

The Standard & Poor’s report stated the superb bond rating reflects the city’s “strong economy, access to the broad and diverse St. Louis economy, very strong budgetary flexibility, strong overall budgetary performance, very strong liquidity and strong management conditions, with good financial practices”.

In 2013, when O’Fallon first achieved an AA+, the city’s bond rating was in the top 94 percent of all cities, parks, counties and school districts in Illinois and one of the top in the area. As of last April, only two cities in the area have an AA+ rating: O’Fallon and Swansea, the next closest municipality with a rating as high as AA+ is located near Bloomington-Normal.

Learn more

Your elected officials understand that property tax is not an endless pot of money and that every one of you, as tax payers, has the right to know where and how your tax dollars are being spent. I encourage you to visit the city of O’Fallon’s Finance Department’s website at ofallon.org/finance-department. On this site, you can view the city’s annual budget, audited financial reports, treasurer’s reports, and warrant reports — which is a list of payments made by the city, and approved by the city council at every city council meeting.

Structured growth, fiscal responsibility, and a bright future are yet further examples of why O’Fallon is such a great community in which to live.