Kane County’s preliminary values for housing assessments this year warned officials that there may be a 20 percent decrease in the value of homes from last year. Coupled with an already tough budgeting season, the city of Elgin may be facing a harsh drop in tax revenues this year.

“Within our budget last year we anticipated there would be a drop, but we didn’t anticipate a 20 percent drop,” Colleen Lavery, the city’s chief financial officer, told the Chicago Tribune.

The city anticipated a loss of about $4.5 million, and expected to come up with a new way to make up the difference. Elgin relies on property taxes rather heavily to fund its annual budget.

With the loss of 20 percent in home value, Elgin housing prices may decline by up to $10 million from last year. This unprecedented drop could combine with declining revenues in other areas, such as sales tax and income tax, to create a deficit that will range from $10 million to $13 million total.

In 2009, under a $1.92 tax rate, the city levied $50.1 million. This figure dropped down to $47 million in 2010. The estimated number for this year, assuming the rest of the year follows the same tax rate, has been set at $38 million. If this ends up being the case, officials will be faced with no other choice than to find new tax sources.

Officials have said that a tax hike is not out of the question for Elgin. However, officials hope that the Kane County numbers are not as grim as they seem, and that it won’t come to that. Yet, in the interest of playing it safe, Elgin city officials are working with the 20 percent drop as a worst-case scenario.