The City Manager’s tentative budget for 2008-09, presented to City Council members on Dec. 31, calls for a 15.15-percent property tax increase and adds new fees and increases existing fees and fines. Expenses, adjusted for interfund transfers, are pegged at $182.9 million, up $17 million or 10.2 percent over the previous year. By City accounts, it will cost an Evanstonian with a $10,000 property tax bill an additional 82¢ per day to live here.

The growth in expenses continues to outpace revenues, but the big-ticket item in the tentative budget is the unfunded liability in the police and firefighter pension funds. Unless and until the City Council decides upon another way to fund the annual contributions, they will be paid through property tax revenues. Both pension funds must be fully funded by 2033. (See Dec. 12 RoundTable.) A referendum question on the Feb. 5 ballot seeks an increase in the real estate transfer tax rate. If voters approve the increase, the increment will be split between the two funds. (See story on page 4.)

The Big-Ticket Items: Pension Funds, Debt Service and Salaries

Unfunded pension fund liabilities came under closer scrutiny this year, and the City’s new actuary revised the amounts owed by the City to be upwards of $140 million. While full funding is not required until 2033, the City is lagging behind with about 41-percent funding and must increase the annual amounts accordingly. These increases account for nearly $8 million in new expenditures for 2008-09.

Expenditures through the General Fund cover the majority of daily operations of the City (excluding fleet, water and sewer services). These expenditures, which include salaries and benefits for the City’s nearly 600 employees, are expected to increase to $84.3 million, adjusted for interfund transfers. This represents an increase of $4 million, or 5 percent, over the prior year.

Other major increases are due to the Sherman Avenue Garage ($2.2 million), sewer service ($1.6 million), debt service on the City’s general obligation bonds used to fund capital projects ($734,000) and fleet service ($960,000).

Revenues Still Lag

As proposed, the bulk of the budget will be balanced upon the shoulders of property owners in Evanston, who would see an increase on their property tax bills next year: just over $300 to an annual property tax bill of $10,000, according to the City.

In addition to the property tax hike, the budget calls for the following increases in fees:

• An increase of $1.95 per month (from $5 to $6.95 per month) in the fee for refuse collection from a single garbage cart ($423,000)

• An additional charge of $2.50 per household per month for refuse collection from a second garbage cart ($100,000)

• A license fee of $40 per unit for all rental units in Evanston ($525,000). This will not apply to university dorms or sororities or fraternities, which are already covered by the City’s rooming house ordinance, said Ms. Carroll.

• Business licenses fees ($42,000)

• Increases in taxi industry fees and licenses ($53,000)

• An increase from $10 to $15 in the fine for parking at an expired meter ($252,000)

• Increases in parking rates – from $80 to $85 in the parking garages and from $.50 to $.75 per hour at meters

• An increase in residential parking permit fees from $10 to $15 per year ($35,000)

• An increase in late fees for overdue library books (adults only) from 10¢ per day to 15¢ per day ($20,000)

• An increase in vehicle sticker fees ($495,000)

On a more positive note, revenues from both home-rule and state sales taxes are projected to be higher in the coming year, due to increased retail sales: The City projects $40,500 from home-rule sales taxes and $100,000 additional from state sales taxes.

Recreation fees are expected to increase between 3 and 5 percent for next year, resulting in about $250,000. Modifications to yard-waste collections and other programs of Streets and Sanitation could garner $235,000 in savings and $160,000 in new revenues – including $100,000 from the Solid Waste Agency of Northern Cook County for increased tonnage of recycled materials.

Real estate transfer tax revenues are projected to drop by nearly 6 percent, or $230,000, in the coming year – from nearly $4 million to $3.7 million.

Trying to Hold the Line on Expenses

City staff have pared expenses again this year, said Ms. Carroll, trimming more than $1 million from City departments overall. The “open exchange between departments regarding expenditure reductions” resulted in reductions developed “across multiple departments in a fair and equitable manner,” according to the budget letter. The result was that non-labor expenses were kept low, and Ms. Carroll says she believes some progress has been made in addressing employee costs.

City administrators began working nearly two years ago with representatives of both AFSCME and the public safety unions – which cover nearly all City employees – to address spiraling medical benefit costs, she said. “Union leadership was involved in discussions with a committee that met for about 12 weeks,” Ms. Carroll told the RoundTable. “I think we have pretty good buy-ins from the unions. We’re adding a deductible for the first time, and we’re increasing the co-pay amounts, which can generate a lot of savings,” she added. The projected savings are $653,000 for this year.

Even with the paring down of expenses, the total expenditures in the General Fund, excluding interfund transfers, are projected to increase about $4 million over the 2007-08 fiscal year.

Personnel Cut, Not Programs

The payoff, if there is any in this budget of major increases, is that no program cuts are proposed. “In my three years here I know there are some things the Council does not want to touch – the branch libraries, for one thing, and mental health funding, for another,” Ms. Carroll told the RoundTable. She added, “This budget proposes to maintain existing services. My concern is that if we cut programs it will cut services and staffing levels we have not talked with Council about.”

In personnel matters, there are passive as well as active cuts. Many senior staff members and department heads have taken advantage of the City’s early retirement incentive programs. Only some of these vacancies will be filled, said Ms. Carroll.

Last year the City offered an early retirement incentive for senior staff; at least seven department heads have announced their retirement or have already left.

Nine full-time-equivalent positions will be eliminated in the coming year, on top of 6.65 full-time-equivalent positions eliminated last year through early retirement. Six new positions are proposed for the coming fiscal year.

New Titles, New Positions

The position of assistant city manager, which will become vacant with the retirement of Judith Aiello in the next few weeks, will not be filled; instead, Ms. Carroll proposes hiring a full-time economic development director.

In the police department, the vacant deputy chief position will not be filled, but two patrol officers will be hired instead, said Ms. Carroll. “The police chief [Richard Eddington] and I propose to create a small tactical unit, composed of two officers and overseen by a sergeant.” Chief Eddington said the tactical unit will be trained to study and respond to crime patterns as they emerge.

Should the Council approve the licensing of rental units, as proposed in the budget, the implementation would require an inspector and a clerk. The cost of those positions would be covered by the revenues generated through the inspections, Ms. Carroll said.

In addition, the budget proposes a new position of assistant director of public works to help oversee the more than 200 employees in that department.

Next Steps

Budget workshops are scheduled for Jan. 12 and Feb. 2, with optional workshops on Feb. 9 and 18, in City Council chambers. The public hearing on the budget is set for Feb. 4, and the final Council meeting to approve the budget is scheduled for Feb. 25. By law the City must approve a balanced budget by the beginning of its next fiscal year, March 1.