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Residents have already had notice that, although fiscal year 2011 will be short in time – from March until December of next year – it will likely be long on taxes. Mayor Elizabeth Tisdahl has said publicly more than once that property taxes will increase. (See page 1 story on water rates.)
At the special City Council meeting on Sept. 20, elected officials heard proposals for new budget policies and tax increases to offset what is now projected to be a $3.5 million deficit.
Needing More Money
The projected $3.5 million deficit is a 12-month deficit, Ms. Earl said, so it will be addressed in both fiscal year 2011 and 2012.
Increases in wages and health insurance account for about $2.2 million of the projected deficit, and increased contributions to the Illinois Municipal Retirement Fund (IMRF) and for unemployment compensation compose the remainder.
Getting More Money
The two taxes most likely to be increased, said Joellen Earl, director of administrative services, are the electric utility tax and the gasoline tax. At present, Evanston has a 3 percent gasoline tax, as does Skokie. Wilmette has a 1 percent tax on gasoline, and Chicago’s is 5 percent. The one-cent increase in the gas tax – assuming consumption to be the same – would net the City an additional $170,000, Ms. Earl said. An increase in the electric utility tax (collected on a tiered kilowatt-hour basis by Commonwealth Edison and remitted to the City) would provide an estimated $100,000, she added.
In addition, the City is aggressively pursuing collections by hiring a new collection agency that would “go after fines of less than $100,” Ms. Earl said. The City has also replaced four of its hearing officers in administrative adjudication, Mr. Bobkiewicz said.
Alderman Ann Rainey, 8th Ward, said she thought this was a good idea, because the new hearing officers would be likely to impose fines. “We can adjust the fines all we want, but if we don’t have hearing officers to impose those fines, [it doesn’t help],” she said.
Mr. Bobkiewicz and Ms. Earl also noted that Evanston is “high” in its tax on liquor but “low” in its tax on prepared food and drink. Imposing taxes on prepared food, even in combination with a lowered liquor (per-drink) tax, was suggested a few years ago and greeted with opposition from the City’s restaurant community.
Alderman Delores Holmes, 5th Ward, asked whether it was time to look again at business and rental real-estate taxes.
Saving More Money
City Manager Wally Bobkiewicz, however, said that making ends meet for the upcoming fiscal year would require personnel cuts as well as tax increases. He has already directed department heads to submit budgets that are 5 percent lower than last year’s figures.
Mr. Bobkiewicz said there will be additional consolidations of services and departments. As an example, the City is working on a comprehensive call-in/answering service, 3-1-1, that would be implemented on 3-01-11, Mr. Bobkiewicz said. Residents would be able to have most of their City questions answered by calling that single number, he said, thus reducing staff time in several departments.
The City may also move to outsourcing refuse collection and have City crews pick up recycling. Public Works Director Suzette Robinson has been advocating for that – a reversal of the present collection services – as a way to save the City several hundred thousand dollars annually. She has also proposed a tax on solid waste brought into the City to the transfer station on the West Side.
Guarding More Money
The budget for the upcoming fiscal year will include three new policies that City administrators say they hope will help the City further stabilize its financial position. Among these are keeping “net debt per capita under $900 or 5 percent of debt per capita” and several other, similar, formulae; keeping the term of general obligation (GO) bonds at or below 15 years; maintaining at least an Aa1 bond rating (the present rating by both Fitch’s and Moody’s is Aaa); increasing the unrestricted fund balance (reserves) in most funds from its present 8.3 percent to 10 or 12 percent; and allowing new funds to be created only if projected revenues exceed projected expenses.
Last year Mr. Bobkiewicz proposed that the City move to a budget year that coincides with the calendar year. Council members agreed to make next fiscal year, 2011, a 10-month “transitional” year, extending from March 1 to Dec. 31, 2011. That measure would then allow fiscal year 2012 to coincide with calendar year 2012. The present fiscal year will expire on Feb. 28, 2011.
At Mid-Year, Cityâ³ Budget Is StableAs of Sept. 1, the mid-point in the City’s current fiscal year, most of the revenues and expenses are on track with budgeted amounts. Joellen Earl, director of administrative services, presented City Council with information about this and next fiscal years’ budgets at a special City Council meeting on Sept. 20.
While the General Fund, the City’s main operating budget, is tracking at just below 50 percent of the budgeted amount at mid-year, Ms. Earl said, the Parking and Water funds are the ones to watch. Although revenues for both the Parking and the Water funds are about 11 percent below the budget target, she said, expenses are also “”significantly below the budgeted 50 percent target. Since there are often timing delays in [the City’s payment] of invoices, it is anticipated that expenses in [Water, Sewer and Parking] funds will come close to budgeted levels.””
Delays – and possibly decreases – in revenues expected to be remitted by the State of Illinois to the City, as well as expected seasonal spikes in expenses as summer bills come due and winter sets in, could, however, punch holes in that budgetary stability.
The reduction in state income tax that is remitted to the City on a per capita basis could be up to 30 percent lower than originally budgeted, Ms. Earl said. Winter overtime charges, for snow and ice removal, e.g., will of course be determined by the weather.
To ensure that the City will end the fiscal year in a stable financial position, City Manager Wally Bobkiewicz has implemented several cost-saving measures, including an immediate hiring freeze on certain positions, requiring City Manager approval for expenses greater than $1,000, and limitations on travel and professional training.
Meanwhile, said Mr. Bobkiewicz, the City continues to pursue the distribution of water to more communities. “”We are working with the Northwest Water Commission to run a second [water] line from here to DesPlaines, and also hoping to connect with communities adjacent to Skokie [where there is a water line already] – to get water through Skokie to them.”” The City would charge those communities for the treatment and pumping of water.
Mr. Bobkiewicz said he expects information from the Northwest Water Commission within the next six to nine months.