The City of Evanston’s proposed budget for fiscal year 2020 was made public on Oct. 4. The $317 million budget is balanced with anticipated new revenues, increases in some fees and a 10.9% increase in levies.

City Chief Financial Officer/Treasurer Hitesh Desai told the RoundTable the 10.9% increase in the levies may not translate to a 10.9% increase in the City’s portion of the property taxes. Cook County is completing its triennial assessment of Northern Cook County. The assessment will affect the City of Evanston’s equalized assessed valuation (EAV) and its property tax rate.

“I don’t know what will show up on the property tax bill,” Mr. Desai told the RoundTable. “We have to wait for the EAV given by Cook County and the Equalizer from the Department of Revenue.” He added he believes that the majority of businesses will see an increase in their property taxes, but property taxes on most of the residential properties will stay the same or perhaps decrease.

On Oct. 3, Interim City Manager Erika Storlie held a press briefing to highlight what Evanstonians can expect to pay in taxes and receive in services in the coming year.

The total proposed budget, including interfund transfers, is $317,296,978. This amount represents a decrease of $1,868,471, or 0.6%, from the 2019 adopted budget.

The General Fund balance, or reserves, will hover at about 13% of operating expenses by the end of the year, about 1% higher than it was at the end of 2018.  Best practices and the City’s Fund Balance Policy dictate that reserves should be 16.6% of operating expenses. The City this year and next year may approve “surplus” budgets to build up reserves.

Ms. Storlie and Mr. Desai said this proposed budget does not include any specific safeguard against a property tax freeze, which State legislators have been considering for several years.

Revenues

The budget is balanced with a 10.9% increase in the combined levies of the City, the Evanston Public Library and General Assistance. The  City’s portion of the property tax comprises about 20% of the overall property tax bill. The two school districts take up about 68% of the tax bill.

New sources of revenue for the coming year are from taxes on sales. Last month, City Council approved a quarter-percent increase – from 1% to 1.25% – in the home-rule sales tax, adding an anticipated $1.5 million in revenue next year. 

A tax of up to 3% on sales of recreational cannabis – in addition to the regular sales tax – is projected to generate $250,000. The company that hopes to sell recreational cannabis in Evanston says it                                                                              believes it will have $20 million in sales next year, Ms. Storlie said. 

New this year, a 5% user fee on self-storage units, also proposed, would generate about $50,000 in income. Ms. Storlie said Council would likely discuss and possibly change a proposal to increase the amusement tax from 4% to 5%.

Two revenue items approved in last year’s budget could come up for discussion again. One is last year’s parking rate increase to $1.50 per hour, which was intended as a phase-in to a rate of $2 per hour beginning in January 2020. The second is an increase of $512, 500 to the solid waste fund, to more closely align the costs and expenditures in that fund. The money would come by either increasing the monthly charge for garbage collection or by folding the charge into the overall increase in the City’s portion of the property tax.

In July the State doubled its motor-fuel tax from 19¢ per gallon to 38¢ per gallon, and it created the Transportation Renewal Fund to receive a portion of the funds generated by the tax increase and then remit monies to municipalities. The City expects to receive $1 million from that fund next year.

Expenditures

Salaries, which account for one of the largest expenditures in the operating (General) fund, will be generally predictable for the next few years, as the City this year settled contracts for 2019-22 with its four employee unions: the American Federation of State, County and Municipal Employees (AFSCME), the Fraternal Order of Police Sergeants, the Fraternal Order of Police Officers and the International Association of Fire Fighters. Non-union employees are projected to receive general wage increases on track with AFSCME employees, according to the budget memo from City Manager Storlie to the City Council. Health-insurance benefits will also increase.

Personnel

The proposed budget calls for no layoffs, holding some vacant public safety positions open and adding 7.5 full-time-equivalent positions – three in the Human Services Department and 4.5 at the new library branch at Robert Crown.

In the Police Department, three open Police Officer positions will be held (not filled); and one Police Commander position will be either held open or eliminated when a police commander retires later this year. 

Two open positions will remain in the Fire Department, said Ms. Storlie. She added the hope is to be able to fill those positions and have the Fire Department fully staffed within several months.

Pension Contributions

Contributions to the Police Officers and Firefighters pension fund will be $11.2 million and $9.2 million, respectively. These contributions, recommended by the City’s actuarial consultant, are higher than the State-mandated minimum, said Mr. Desai. He added that each of those pensions is about halfway funded.

Debt Service

Expenditures for the debt service fund are projected to increase by $1.6 million. About half of that, $638,000, will be the debt service on bonds for the new Robert Crown Center. Most of the remaining increase – about $960,000 – is due to an increase in payments on 2008 series bonds that were refinanced in 2018. The refinancing created a decrease in debt service for this year but an increase in subsequent years.

Other Expenditures

Capital expenditures are expected to be about $15 million in 2020, about $10 million of which will be funded by bonds, Ms. Storlie said.

The Library’s budget – which is approved solely by the Library Board of Trustees, not the City Council – shows an increase of about $500,000 for 2020. That amount includes current operations and the new branch library at Robert Crown, Mr. Desai said.

Structural Changes

Two changes to this year’s budget season are the creation of a two-year budget and a consolidation of human services money under one line item, the Human Services Fund. That fund will cover distributions from the City’s Mental Health Board, the Youth and Young Adult Division, the Human Services and Community Health Divisions and three new full-time-equivalent positions. Expenditures in this fund are projected at $3.4 million.

Council Comments

During a budget discussion at the Oct. 14 City Council meeting, aldermen brought up two challenges that do not seem to have easy solutions: parking and reparations.

Alderman Robin Rue Simmons, 5th Ward, brought up a “fantastic idea” suggested by Eighth Ward Alderman Ann Rainey: using the tax revenue from cannabis sales as one way to fund reparations. “About a year ago, we agreed as a Council to work for reparations,” she told her colleagues. 

Ms. Storlie said the $250,000 revenue from the tax on cannabis sales – which would be imposed on top of the regular sales tax – was a “conservative estimate.”

“There are a few unknowns,” she added.

Ald. Simmons also asked for a budget memo describing how the City would be affected if only $1 million rather than $1.5 million were put into reserves and $500,000 put into the reparations fund.

Alderman Eleanor Revelle, 7th Ward, said she would like a budget memo on parking. “The $2 per hour is going to be hard on Central Street businesses. Wilmette has a burgeoning restaurant scene and free parking. A lot of people are taking advantage of that,” she said.

Alderman Melissa Wynne, 3rd Ward, said she agreed it would be good to have “a budget memo on what the $2 per hour parking will produce.”

“Sure, we’ll get that for you,” said Ms. Storlie.

Ald. Rainey said she would like a budget memo that “fleshes out” revenue from liquor sales, licenses and fees.

Mayor Stephen Hagerty said he would like “an interactive spreadsheet to show how we got to $319 million.”

Budget Calendar

Oct. 26: Budget Public Hearing at City Council Meeting

Oct. 28: Truth in Taxation Hearing at City Council Meeting

Nov. 11: Budget discussion at City Council Meeting

Nov. 23: Adoption of Budget and Tax Levies at City Council Meeting

Although City staff created a budget for FY 2020 and 2021, City Council is expected to approve only the FY’20 budget in November. The proposed FY’21 budget will serve as a framework for the following year, and adjustments can be made at that time, Ms. Storlie said.