With the national and global economies crumbling, the City of Evanston, like other municipalities, is trying to craft a budget that will preserve jobs and programs without undue strain on the community. “It’s been an extremely rocky year, as you are all well aware,” Interim City Manager Rolanda Russell told the City Council members, staff and audience at a Budget Policy Committee meeting held on Oct. 6 at the Levy Center.

“We wanted to engage the Council early, share our concerns and our estimates and seek direction from the Council on alternative funding sources,” she added.

Finance Director Martin Lyons presented a tentative budget for fiscal year 2009-10: $93.6 million in expenses with a $2.8 million shortfall, balanced at present by a 5 percent increase in the City’s portion of the property tax (which is about 20 percent of the overall property tax bill).

This represents a 4.5 percent increase over last year’s budget. The goal of the 2009-10 budget is “stabilization,” Mr. Lyons said.

Challenges

Mr. Lyons cited a stagnant economy as the primary reason for the shortfall in the budget. On the positive side, he noted that, except for the decrease in housing sales, Evanston’s economy is better than the national one.

Real estate transfer taxes are down by $700,000 this year, because of low activity in housing sales.

The public is buying less, resulting in sales taxes coming in at a slower rate, Mr. Lyons said. However, taxes that are not based on discretionary spending are projected to continue to be strong, at least for 2009; and the State income tax – a portion of which is remitted to municipalities – continues to be strong, although it may slow in 2010.

Conversely, the costs of such commodities as salt and fuel and “even parts for trucks” have risen dramatically, increasing delivery costs of those products.

Projected Expenses

Operating costs, as reflected in the City’s General Fund, are projected to increase only slightly – by about $200,000. That amount includes the increase in elected officials’ salaries approved by City Council last month.

Debt service and contributions to the fire and police pension funds will account for two of the major increases in the upcoming budget.

The tentative 2009-10 budget allocates $12.3 million to the pension funds: $6.7 million to the police penion fund and $5.5 million to the firefighters pension fund, Assistant Finance Director Steve Drazner told the RoundTable. He also said the debt service is projected at $10.3 million for next year.

The City also projects an 11 percent hike in health insurance costs. In addition, said Mr. Lyons, three of the four union contracts will be renegotiated within the next few months.

Mayor Lorraine Morton has been adamant about not cutting jobs, and this tentative budget proposes no layoffs. No programs would be cut, Mr. Lyons said, but residents can expect “changes in execution” of the way City services are delivered, as part of the five-year strategy to stabilize the budget.

Competition for State and Federal grants has increased, making less grant money available.

Increase Revenues

The five-year stabilization strategy calls for increasing revenues, and the aldermen heard several proposals for both one-time and ongoing revenue sources.

Sell City Property: The City could sell some of its property, netting one-time revenues as well as ongoing property taxes if the property is returned to the tax rolls.

Increase Refuse Collection Charges: Although the charge for residential garbage and recycling pickups was increased last year, the City still absorbs some of the cost. Mr. Lyons said Evanston’s rate is still lower than its neighbors, and he suggested increasing this rate.

Mr. Lyons also proposed a sticker system, under which residents would pay for sanitation pickups on a per-bag basis by purchasing a sticker for each bag.

PILOT Program: A voluntary PILOT (payment in lieu of taxes) by not-for-profit organizations program might provide additional revenue.

A subcommittee of the City’s Rules Committee is investigating the feasibility of such a program.

Food-and-Beverage Tax and Decrease in Liquor Tax: A proposed new food-and-beverage tax in tandem with a lowering of the liquor tax appeared again this year, although no specifics were presented at the meeting. Council rejected a similar proposal last year.

Mr. Drazner told the RoundTable that the Council would have to decide on both the amount of the prepared-food-and-beverage tax, if it is implemented, and the reduction, if any, in the liquor tax. A guideline, he said, is that a 1 percent reduction in the liquor tax represents about a $300,000 decrease in revenue to the City.

Reduce Expenses

With a shortfall of $2.8 million in the first draft of the budget, the budget staff members say they plan to continue to work to reduce expenses but also intend to maintain the current level of service by “re-engineering the delivery of those services.”

Mr. Lyons said, “If we need to tighten our belts, elimination of vacant positions would be a way to go.” He indicated that the heads of the City’s departments appeared to understand the need for a spare budget. He said they all agreed not to fill vacant positions, garnering a savings of about $500,000.

Council Comments

Council members offered a few suggestions about how to increase revenues and decrease costs for the 2009-10 budget. Alderman Anjana Hansen, 9th Ward, suggested that the City make a greater effort to collect fines levied on property-standards violations.

“We have a collection agency going after people with unpaid parking fines – maybe a $25 fee that someone forgot to pay years ago – but when the administrative adjudicators assess fines for property standards, we let them go,” she said.

Alderman Cheryl Wollin, 1st Ward, suggested a tax on plastic shopping bags such as those used by grocery stores, drug stores and the like. The city of Seattle recently implemented such a tax, she said. No price was mentioned; the Seattle tax is 20 cents per bag.

Several aldermen appeared to oppose the food-and-beverage tax – perhaps surprised by its reappearance this year. Mr. Lyons told the RoundTable the proposal would remain in the tentative budget for further discussion.

Staffing is a major expense to the City, and Council members said they want to see expenses controlled. They offered suggestions on how doing more with the existing staff would benefit both the budget and staff efficiency.

While Council members appeared to endorse the proposal of not cutting any staff positions, some expressed concern about efficiency in delivery of services.

Ald. Hansen said she wanted to know more about staff required to complete specific jobs. “How many men does it take to chop down a tree or pave an alley?” she asked. She said she has heard from some of her constituents that they have the impression that “this work is not efficient.”

Alderman Ann Rainey, 8th Ward, suggested reviewing all existing positions to ensure that the City is operating at its leanest level and whether some redesign might work more efficiently “before it is too late to make any changes.” She also questioned the value of certain training sessions and workshops.

Consultants’ fees have risen over the past years with the spate of City plans – the Lakefront plan, the Arboretum plan, the West Side plan, the downtown plan and the Central Street, for example.

Ald. Rainey said she was concerned about the quality of consultants used by the City and asked for a “breakout of consultants,” by quality as well as quantity of work. Mr. Lyons responded that consultants are evaluated in terms of return on investment – both quality and quantity.

The City will hold a series of budget workshops in January. By law, the City must approve a balanced budget by March 1, the beginning of the next fiscal year.

Highlights of the Tentative Budget For 2009-10

• Tentative budget calls for $93 million in expenses.• The $2.8 million shortfall is filled at present with a 5 percent increase in the levy, which amounts to about a 1.25 percent increase in the property tax bill. • Payments to the police and firefighters’ pension funds and cost of debt service account for the greatest increases in the 2009-10 budget. • No positions will be cut and few vacancies filled.• No programs will be cut, but delivery of services may be “”re-engineered.””• An 11 percent increase in health insurance costs is projected.• Contract negotiations with three of the four unions are upcoming and will affect the budget. • An increase of $199,000 is projected in the General Fund.• A proposal to implement a prepared-food-and-beverage tax in tandem with a decrease in the liquor tax – rejected last year by City Council – is back on the table. • All departments have pledged to work on efficiencies.