The budget for the city's new fiscal year shows there will be enough in the coffers to make the sewer treatment plant loan payments, but will cover little more than general operations.
The City Council has been meeting as a committee of the whole for the last three weeks to review the proposed budget for fiscal year 2015, which began May 1. The council has to approve its budget by the end of July.
City accountant Kim Doglio explained that four out of the city's 13 funds used fund balances to get through the last fiscal year; more because revenues didn't materialize as hoped than overspending.
"In actuality, we spent under our budget, but our revenues didn't come in the way we anticipated," Doglio said. For example, the city anticipated $350,000 in building permit fees, that, although they weren't received last year, will very likely be received this year with the development at RidgePort. (The permit and inspection fees for Michelin's building at RidgePort total $562,000)
The council had also planned to spend from reserves to balance last year's budget, hoping for better economic times to come.
The fiscal year 2015 budget is the first that Doglio has been fully responsible for developing. She was hired last year well into the budget process. Her goal this year is to use true numbers, and more conservative forecasts. This year's budget is based on zero growth - if development happens it will generate revenue that will affect the budget in a positive way.
"If we can balance without including the what ifs on the revenue side - that's where we want to be," Doglio said.
The city will be collecting $1.19 million in property taxes this year, including property tax to pay bond and interest commitments, for general corporate purposes. State sales tax, utility tax and income tax, surpassing $2.2 million, are the city's other significant sources of income. The water and wastewater funds are enterprise funds - they receive user fees and payments rather than property taxes, and must operate in the black.
One of the aldermen's greatest concerns was ensuring the wastewater department revenues would be sufficient to make the payments on the treatment facility loan, due in June and December. The council instituted a $20 monthly wastewater base fee last year, which increased to $27 per month per user this year. The Illinois Environmental Protection Agency permitted the city to make one interest-only payment last year, which permitted the revenue generated by the new base fee to build and sustain the loan payments. The principle that was not paid in that semi-annual payment was amortized over the remaining life of the loan.
The principal and interest due this fiscal year is more than $902,000. City administrator Tony Graff said the base fees, the fund balance and about $200,000 in developer fees made the June payment, and there will be sufficient funds on hand to make the December loan payment.
Doglio said the balance in the water and sewer operating fund at the end of the fiscal year should be about $709,000.
"That sounds huge, it's really not, because at any given time ... about $175,000 of that would be accounts receivable; billing that's out there, it's not cash in hand," she commented. "If you back that $175,000 off, and the loan payment if $451,000, and it's due June 1; realistically, we need our fund balance, at the end of each year to be about $625,000."
Graff and Doglio are recommending that the council review the wastewater rates in July. Another rate increase is scheduled to be effective in January, pending consideration by the council later this year.
The wastewater department would like to purchase three $22,000 control panels for lift stations, blower motors and other equipment for operational efficiency.
Water system improvements include main replacements on Ryan and River streets, which would be paid for from the water capital projects fund. The department's budget anticipates receiving and spending over $400,000 to replace the water main on Baltimore Street between First Street and West River Road. The budget includes $74,000 for sludge disposal activities.
The police department is the only one asking for additional personnel - Chief Darin Plotts would like to request extended hours for its part-time records clerk, and add an officer to its roster. Graff would also like to create a program for part-time code enforcement officer.
Projects anticipated to be paid for from the capital project fund include the installation of stop lights on Route 53 and South Arsenal Road and improvements at the intersection of Route 53 and Peotone Road. Those projects total more than $5 million; with the bulk of the funding for them coming from state Economic Development Program grant funds related to the creation of jobs at U.S. Cold Storage and Illinois Transport.
The council is considering hiring a lobbyist to assist with those EDP funded projects; they are ones the city has been trying to get moved through and has been stumbling on, Doglio said. The tentative budget includes $5,000 for this purpose.
The council is also directing significantly more money to the police pension fund, trying to reduce its unfunded liability. The city put $274,264 into the pension fund last year, and plans to contribute $361,800 this fiscal year.
Doglio is encouraging the council to take action to earmark funds, which will restrict them for use for a particular purchase. The aldermen have been earmarking funds for vehicle purchases, future replacement water meters and other large expenses, but not always using those funds for the intended purposes.
"If you commit it for a purpose, it stays committed and you can't spend it for something else, at least not without board approval," she explained.
The tentative budget is expected to be placed on display June 17. The first opportunity to approve it will be July 1.