City Manager Wally Bobkiewicz warned a wary City Council Monday night, July 23, that staff layoffs may be looming as the best and only way to fill an anticipated $3.3 million 2017 budget shortfall and other ongoing budget challenges. A package of proposed cuts, transfers of funds from dedicated accounts into the general fund, and negotiated trimming of a general wage increase to union employees will not be enough, especially since City Council declined to increase parking ticket fines earlier in the evening.
The package of budget patches may allow the City to avoid layoffs in 2017, said Mr. Bobkiewicz, but “this is a multiyear issue.” The only other way to address budget issues, aside from revenue increases, is expense reduction.
“As we looked for a solution, it was clear to me taxes and fees [increases] were not on the table,” he said. “After tonight, penalties are not on the table either.” That said, “additional reductions will be necessary….we need to look more broadly… The impacts of reduced building in the City are real,” as is “ongoing uncertainty in Springfield.”
The package of “staff-implemented budget savings” includes delaying a negotiated 2.75% employee wage increase to July 1 rather than having it retroactive to Jan. 1, saving about $750,000; reducing the capital improvements budget by $800,000, meaning fewer projects get done this year; paying $400,000 less than budgeted in debt service; cutting $300,000 from fleet services, something made possible by cheaper-than-expected gas prices; transferring $500,000 from the parking fund; transferring $150,000 from the General Assistance Fund; chopping the City Manager’s contingency fund by $150,000; closing the 311 service on Saturdays at a savings of $20,000; making a 1.5% across-the-board cut in non-personnel items from all departments, saving $150,000; and using $200,000 of the $1.2 million in fees collected from Advanced Disposal that is in the General Fund but has not yet been allocated.
The package also included $205,000 in additional parking ticket revenue, but Mr. Bobkiewicz said he would return to Council with additional cuts to cover the lack of added revenue.
The budget shortfall comes primarily because the City will receive $2.6 million less than budgeted in building-permit fees. The City’s budget expected $9.32 in building permit fees when the budget passed but revised projections expect just $6.36 million. It is the second time in the last three years project delays have blown a hole in the City budget because the City has not received budgeted building permit fees. In 2015, the Army Corps of Engineer’s extended review of the Northwestern Athletic Center was the stated culprit.
In addition, sales tax receipts and income tax receipts are down, and the state local distributive fund will provide about $360,000 less than budgeted.
The 2017 budget crisis is just the beginning, said Mr. Bobkiewicz. “We need to look beyond 2018 into 2019,” he said, and study “operations at the City level.” He said Council needed to study the City Manager’s office (about $9.9 million budgeted in 2017), law department ($854,000, not including the insurance fund managed by the law department and currently about $2.5 million in the hole); the Police Department (by far the largest department line item, at more than $38 million).
All in all, budget pressures will “require us to do less things, and yes, it will likely require layoffs,” said Mr. Bobkiewicz. “We want to be fair to our employees, but we also need to be real with our employees.” He also said furlough days may be necessary, and hinted furloughs may be necessary to fill the $205,000 revenue gap in his plan caused by the refusal of the Administration and Public Works Committee to raise parking ticket fees.
“The biggest issue in our budget was us overestimating our permit fees,” said Alderman Cicely Fleming, 9th Ward. She suggested reviewing membership fees for employees and employee recognition events, and insisted that furlough days, if needed, should be viewed through an equity lens. Employees who make less can ill afford unanticipated days without pay, she said.
Alderman Robin Rue Simmons, 5th Ward, suggested the City try to collect more from “habitual property standards offenders. Some property owners owe into the tens of thousands, she said.
Alderman Tom Suffredin, 6th Ward, suggested out-of-state or out-of-town visitors could help through the hotel tax or rental car tax. Bed-and-breakfasts and Airb&b rentals are not currently subject to the hotel tax, and expanding it to cover those businesses could bring in revenue, he said.
Mr. Bobkiewicz said staff would look into it, and added Chicago has a tax on shared-rider services like Uber and Lyft, and staff would be looking into such a tax in Evanston as well.
Returning to a point made at an earlier meeting, Alderman Peter Braithwaite, 2nd Ward, said the City should process day-to-day permit applications, like kitchen replacements, more efficiently. He said some residents do whatever they can to avoid getting a permit to avoid delays, citing one resident who declined to build a fence because he “felt it was too difficult to apply for a permit… We are leaving money on the table by not streamlining the process,” he said.
City Manager Bobkiewicz said he would return on Aug. 14 with suggestions incorporating Council ideas. He stressed the “importance of balancing… I’ll be honest with you, this is hard stuff … We are committed to being fair, we are committed to being equitable … fair to taxpayers, fair to our employers.”