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Last week, City Manager Wally Bobkiewicz presented his proposed budget for fiscal year 2011. The $191 million budget includes all funds except the capital improvement fund, he said in his transmittal letter to City Council.

Budget Balanced with Tax Increases,
Layoffs, Furloughs and More

The budget projects about a $3 million deficit in the General Fund, the City’s main operating fund. To address that gap and to ensure that the City makes the actuarially required contribution (ARC) to the police and firefighters pension funds, Mr. Bobkiewicz proposes expenditure reductions that would include layoffs, furlough days for some City personnel and salary adjustments for non-union personnel.

To increase revenues, the budget proposes an increase in some taxes and fees, including a 3 percent hike in the City’s portion of the property tax, which is about 20 percent of the overall property tax bill. Layoffs and service reductions comprise the main proposals to decrease expenses.

In presenting his recommendations for spending for the next fiscal year – March 1 – Dec. 31, 2011 – Mr. Bobkiewicz discussed some successes for the City over the past year, highlighting the focus on the City Council’s goals that framed much of the City’s policy this year: public safety, economic development, delivery of City services, and relations with Northwestern University. He also discussed the state of the City and outlined ongoing challenges for the coming year.

“The recession continues to have an impact on the City of Evanston. We have been diligent in curtailing expenditures and focusing on efficiency and effectiveness of services. While our revenues appear to be leveling off during the current fiscal year, we remain cautiously optimistic about increasing estimates until we see stronger signs of economic recovery,” Mr. Bobkiewicz said.

One of the biggest unknowns, Mr. Bobkiewicz said, is the State of Illinois, which is facing a $13-$15 billion deficit “that will not be addressed until the first quarter of 2011 at the earliest. I believe that the State will take money from cities to balance its own accounts.” Because this 10-month budget is to be approved in November but will not go into effect until March 1, the City Council “will likely face additional budget decisions [in] the first half of 2011,” he added.

Pension Contributions –
Growing ‘Unsustainably’

“Pension costs continue to grow at an unsustainable rate,” said Mr. Bobkiewicz in his transmittal letter. In this year’s budget, the contribution to the firefighters and police pension funds, more than $19 million, is equal to 62 percent of the amount budgeted for salaries (including benefits) of current fire and police personnel.

The ARC for the police pension fund is $11.4 and $8.5 for the firefighters pension, an increase of $1.2 million over the present year’s contributions.

The City’s unfunded liability to those two funds is estimated as of March 1 each year. The City’s actuary, Gabriel Roeder Smith estimated the present liability as of March 1, 2010, to be $176 million. Last month, Joshua Rauh, a professor at Northwestern University’s Kellogg School of Management, recently told City Council members he believed the unfunded liability was between $300 million and $400 million.

The 3 percent increase in the tax levy, Mr. Bobkiewicz says, will be used for pension contributions.

Taxes and Fees –
Some New, Some Increased

In addition to the proposed increase in property taxes, the budget proposes a per-ton tax on solid waste brought into the City to the transfer station on Church Street; a 1 percent increase in the gasoline tax, an increase in the right-of-way permit fee and the electric utility tax, and an increase of $2 for beach tokens.

In addition, Mr. Bobkiewicz said, the City will make a concerted effort to lease the vacant space in the Civic Center – possibly to the Township of Evanston, which relocated from the Civic Center to Main Street a few years ago.

The Township of Evanston appeared again this year in citizens’ budget discussions. Some have proposed that City Council eliminate the Township, since the Township of Evanston is coterminous with the City of Evanston and City Council members serve as Township trustees. However, townships are created by State statute, and some have suggested that eliminating Evanston Township would have to be done through a countywide referendum and that the question would likely involve eliminating other Cook County townships – and possibly only coterminous ones.

Layoffs, Furloughs and Service Reductions

Under this proposed budget, 21.65 full-time-equivalent positions would be eliminated. Ten of these positions are vacant, Mr. Bobkiewicz said, so the layoffs would impact 12 employees. However, the new 3-1-1 call center calls for the hiring of 12 employees, and the laid-off employees were encouraged to apply for these positions, as were all Evanston residents, said Joe McRae, assistant to the City Manager.

The budget proposes an almost 50 percent reduction in the amount allocated to local social service agencies – from $385,000 in the present fiscal year to $175,000 in 2011. Mr. Bobkiewicz noted the dramatic decrease – 80 percent – in these funds, called community purchased services, over the past two years: from $585,000 to $385,000.

For library services, the budget proposes $3.7 million. The City Manager recommends closing the two branch libraries and using “the budgeted resources for the branches toward enhanced support of the Main Library.” Even though he proposed shuttering the two branches, Mr. Bobkiewicz said, “I am also committed to fundraising for the library to enhance our collection and to support outreach efforts.”

Expenditures

Health insurance costs for employees and City Council members are expected to increase by about 12 percent next year, Mr. Bobkiewicz said.

New projects and personnel and a restoration of some of last year’s salary cuts are some of the new expenditures proposed in this budget. City staff have been working on two major City divisions, to be rolled out next year: a volunteer center and a 3-1-1 call center. The call center will “result in the addition of 12 full-time-equivalent positions,” Mr. Bobkiewicz said. These new projects will increase efficiency in the delivery of City services, he said.

In addition, Mr. Bobkiewicz has proposed a reinstatement by 2 percent of the 5 percent salary cuts taken by department heads last year.

Mr. Bobkiewicz said that indications point to the current fiscal year’s ending in the black – with about $400,000 in the General Fund. With the questions about remittance from the state, seasonal expenses (such as for snow removal) and other possible expenditures, he has implemented several measures for the remainder of the year: a hiring freeze, expenditure control, requiring prior approval for training and travel, and reductions in overtime.

In addition to these proposed taxes, fees and layoffs, the City has approved a 10 percent increase in water rates, effective Jan. 1, 2011.

The City Council is scheduled to hold budget discussions on Oct. 23 and Nov. 6.