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Even though some parts of the national economy are showing tenuous signs of revival, Evanston’s economy is not likely to recover for at least a year, said Finance Director Martin Lyons.
“We’re still at the bottom,” Mr. Lyons said in presenting the first-quarter budget review at a special Council meeting on July 8. He projected the total shortfall in revenue for the present fiscal year at $4.6 million, or 5 percent of the total budget.
Mr. Lyons also said, “August and September are our ebb tide” – when the City’s reserves are typically at their lowest.
Cigarettes and liquor appear to be shoring up the economy. “The [state] sales tax and the home-rule sales tax [revenues] are really holding strong,” he said, in part because of the sales tax revenues from cigarettes and liquor.
Expenses in the Parks/Forestry and Recreation Department, the Health and Human Services Department and the Police Department are all below the budget projections. Expenses for those departments in the next quarter, when higher summer expenses (because of seasonal workers and the police summer plan) are included, are expected to increase.
A $1.8 Million Solution Needed
The General Fund needs immediate attention, Mr. Lyons said. Seventy-five percent of the expenses budgeted through the General Fund are employee-related.
“We’re tying to cut $1.8 million from the [present] budget. The departments have been asked to reduce their budgets by 2 percent,” Mr. Lyons said.
Mr. Lyons outlined two sets of expense-reducing options the City is considering, calling one more “aggressive” than the other.
The first set of options involves a hiring slow-down, filling only positions needed for productiveness or life-safety, and closely monitoring and justifying expenses for training, travel, capital and technology.
The second set of options includes a hiring freeze – even on police officers and fire-fighters; employee furloughs or reconfiguring hours of operation (such as closing the Civic Center one day each week and expanding hours of operation on the other four days); evaluating programs (with an eye to eliminating or curtailing them); and a capital-spending freeze.
Layoffs, he said, would be a “last resort. We want to keep services as they are.” Although these measures are being considered, Mr. Lyons said, he did not have concrete figures for the cost savings any would garner.
Interim City Manager Rolanda Russell said Walter Bobkiewicz, who will take over as City Manager on Aug. 3, has been notified of the situation. She and Mr. Lyons said City staff members wish to have Mr. Bobkiewicz’s input before implementing any measures.
The budget process for the upcoming fiscal year is set to begin Aug. 5.
Pension Fund Liabilities
Liabilities to the police and fire pension funds have increased over the past year from $145 million to about a $158 million, Mr. Lyons said, and next year’s contributions will increase from $12.7 million to about $14 million.
That figure does not represent the full make-up amount, Mr. Lyons said, because “the actuary [Gabriel Roeder Smith] is smoothing it out for us [over more than one year].” Both pension funds are about 40 percent funded, he said, and that percentage [of the amount funded] will “continue to drop because of the actuarial smoothing process.”