Evanston City Council members brought a difficult budget process to a close Nov. 23, adopting a $296 million total budget for 2021, lowering a proposed property tax increase from 5.9% to 1%.
But they also had to dip into the City’s reserve fund to produce a chunk of the revenue and are looking at a possible sale of City assets to rebuild the fund in the future.
Council members looked at a wide range of alternative funding sources or cuts in services, during the course of the-three hour budget discussion Nov. 23, with some stating their goal was a zero-percent hike. With those changes, and $500,000 from the City’s reserve fund, officials reached 1% in a difficult year with the City grappling with reduced revenues due to COVID-19.
Under the 1-percent hike, the owner of a house with a market value of $400,000 can expect to pay an additional $19.40 in the City’s portion of the total property tax – about 17% of the overall property tax bill.
Even with the property tax increase at 1%, Alderman Cicely Fleming, 9th Ward, was among a group of aldermen willing to keep going to bring that down to zero, maintaining the need to show “we’ve done all we can.”
Ald. Fleming had been pushing for aldermen to roll back contributions to the City’s police and fire pension funds, a move officials estimated under one scenario would produce savings of $585,000.
Those receiving those pensions have access to several pensions, she maintained. “Their pension system is set up. They can retire from here – go somewhere else. I don’t know how many people are doing that.”
She also noted that the police union, the Fraternal Order of Police, which represents close to 200 Police Department employees, had still not agreed to the salary concessions which the City’s other unions and non-union employees had agreed to, to help the City to cut expenses.
Another alderman, Peter Braithwaite, 2nd Ward, argued that he was ”close to being okay’ with the 1% hike on the table as it was, maintaining the extra $24 a resident would be paying on a property with a market value of $500,000 “may not throw me or anyone else out of my house.”
He expressed concern about cuts to the City’s pension contributions – the City is still at 50% of funding the outstanding liabilities in the funds – maintaining that “someone’s career choice is different from our financial obligations. So, again, if someone chooses to be a fireman, that’s not up for debate. Our obligation is our obligation. And I don’t want to go anymore into reserves,” he added. “I don’t want to put ourselves into a situation we are looking at in pensions.”
He said with the City’s taking up 17% of the property tax bill, the Council’s next move should be “going back to our residents and saying we did the best thing we could without compromising services or staff personnel. And now we need to return to our advocacy to District 65.” The two public school districts take up about 68% of the property tax bill. Unlike many of the taxing bodies that figure in the property tax bill, the City can impose other fees and charges to increase its revenue.
Alderman Robin Rue Simmons, 5th Ward, countered that she was “not as concerned what the [school] districts are doing. I’m a lot more interested in us leading by example and showing the community what is possible for a governing board in municipal government and [those] in elected roles – and we can get to zero.”
The budget narrowly passed, 5-4.
Voting for the total budget, which included the 1% increase, were Aldermen Judy Fiske, 1st Ward; Melissa Wynne, 3rd Ward; Donald Wilson, 4th Ward; Eleanor Revelle, 7th Ward; and Ann Rainey, 8th Ward.
Voting against were Alderman Thomas Suffredin, 6th Ward and Aldermen Braithwaite, Simmons, Fleming. After the meeting, Ald. Braithwaite said he had voted “no” out of concern about the impact of the property tax hike on businesses and residents.
Ald. Fiske jointed the majority after receiving assurance that Council members were committed to rebuilding the City’s reserve fund.
City Manager Erika Storlie’s original budget proposal called for the City to bolster that fund, the City’s backup in special situations, calling for a fund balance goal of 16.6% of expenses — roughly $18.7 million in total.
Officials say the reserve fund as well as the City’s funding of police and fire pensions are two areas looked at closely by agencies such as Moody’s and Fitch when assigning a credit rating in large bond issues.
Ms. Storlie’s budget proposal called for the City to put $1 million into the reserve fund, including $500,000 of the nearly $3 million generated through the property tax increase proposed in her original budget.
Aldermen ended up putting no money into the reserve fund, using $500,000 in it to lower the property tax hike the City was seeking.
With the reserve, Ald. Rainey said, “We can pontificate about how we can’t touch this cash, but that’s what it’s there for – we need to use it. And we need to help these people get through this year without raising their taxes.”
Ald. Fleming acknowledged the importance of maintaining the reserve fund and receiving a good bond rating “but do I want my neighbor to go into foreclosure?
“I think we’re working on a lot of hypotheticals, which I guess makes sense, but people are in dire need. We just gave away 500 turkeys at the food pantry,” she noted.
Other Council members acknowledged the need.
“But my concern is that things are potentially going to get worse, and there are significant indications that we are staring down at some even deeper challenges going into the next year,” Ald. Wilson said. “So I think if that happens, our community is going to be relying on the City to provide even more services than what we’re doing … and that it’s incumbent on us to stay as financially stable and secure as we can right now.”
City Manager Storlie told Council members the City has a number of options — including looking at sales of City assets, consolidating and right sizing its portfolio of assets. “These are all things we can look at during the course of next year,” she said.
Ald. Fiske said she was concerned that “there isn’t a clear way forward.”
She asked for, at least, a commitment “that folks are willing to look at using the sale of City assets to bolster our reserves, getting them up to staff’s funding goal.”
Well before the final vote, officials had taken a number of steps in response to the decimating of revenues because of COVID-19.
Officials had projected $8 million in revenue loss in 2021 compared to the 2020 budget.
They included major losses to the hotel tax, athletic contest tax, amusement tax, parking tax and other areas affected by the economic shutdown.
The budget balancing effort advanced by Ms. Storlie and her budget team included $2.5 million in expense reductions, as well as eliminating15 positions – at a savings of $1.2 million – and holding 26 positions vacant – saving $2.3 million – for 2021.