DAVID GREENE, Host:
Just as Detroit is struggling, so are cities and local governments nationwide. They're faced with lower tax revenue and rising costs. But one Chicago suburb is bucking the trend. Chicago Public Radio's Adriene Hill reports on one municipality that's actually giving tax money back to its residents.
ADRIENE HILL: OK. So this probably sounds like some sort of magical dreamland. But even in a recession, the village of Crestwood, Illinois, a small community with about 12,000 people, has surplus funds that it's redistributing to eligible homeowners. Of course, this is real life we're talking about, so there's paperwork to fill out.
U: Fill up the what? The top two?
U: These two bottom lines.
U: Oh, I'm sorry.
HILL: The village clerk has to review all the documents, and stamps applications with a satisfying, inky pound.
(SOUNDBITE OF STAMP)
HILL: In 2008, homeowners here got about a quarter of their total property tax bill back. So someone who paid $3,000 in property taxes got a check for about $750. Marilyn Sullivan is in line at the office, waiting to apply for her refund. She's lived in Crestwood for 22 years.
M: There was a time I thought about maybe moving, and then I thought about my little tax refund and I thought, oh no. I just - this is like my little heaven.
HILL: And do you have friends in nearby towns who are jealous of your tax refund?
M: Oh, you better believe it. You better believe it. Enough that I had one of my friends move here, you know, because of that. And - yes, they're wondering, like, how come your town got it?
HILL: And that's the thousand dollar - or so - question. How, especially in a recessionary economy, is this village able to send the money back to its residents? Mayor Robert Stranczek says it takes a lot of work and a lot of frugality.
M: It's been the village's policy for over 40 years to run the village as a business.
HILL: The tax rebate has been in place for more than a decade. It works like this: Sales taxes from two shopping centers in the village are set aside for the tax surplus fund. It's that money that gets mailed back to residents, giving them an added incentive to shop in their community. And, Stranczek says, the village manages its costs. It saves up to buy what it needs, things like repaving neighborhood sidewalks and building a community pool.
M: Oh, you know, we see how Crestwood is, to a lot of people, the envy of the South Side here, and we're proud of that. And we put a lot of work into that actually, too. It's a lot easier to go around and pass bonds and pass tax referendums and get more money, but it's not the prudent thing to do, as we see in other forms of government.
HILL: The village has privatized some city services, including garbage collection, accounting and payroll. Village workers aren't unionized, and it leans heavily on volunteers and part-time workers.
M: We have 25 full-time employees for our village, and we have 12,000 residents here. We have a full-time police chief, but then we have part-time officers who work there. We have a volunteer fire department. So a lot of our expenses there are lower from other communities that have full-time forces.
HILL: Even Stranczek works part time. He also runs a trucking company. Professor Michael Pagano researches municipal finance at the University of Illinois at Chicago. He says privatizing village services and counting on part-timers can help a village like Crestwood manage its budget. But there is a downside.
P: You often lose a lot of loyalty. There's a commitment to dedication of the work force that is questioned by having either part-time employees, or having employees in which the work is contracted out or on an occasional basis.
HILL: And, he says, with privatized labor, municipalities have the additional responsibility of making sure services are actually being delivered. AFSCME, a government employees labor union, argues that privatization can lead to lower-quality public services. But no one I talked to in Crestwood had any concerns. Though when I talk to them, they were signing up to get some of their tax dollars back. For NPR News, I'm Adriene Hill in Chicago.