Schaumburg OKs new budget, with worries and hope

Schaumburg’s annual budget — so much the subject of the village’s recent election campaign — was recommended for approval by trustees Monday night with a 1.1 percent reduction from last year in its general-fund spending.

But while the village is collecting more taxes driven by the economy and is successfully reducing spending, the year ahead will still be full of challenges and uncertainties, Village Manager Ken Fritz said.

Among these are rising fuel costs, proposals by the state legislature to permanently withhold $1.8 million per year of the village’s share of the state income tax, and the negotiation of new contracts with four of Schaumburg’s five labor unions.

But village leaders believe the strengthening of the economy and the use of technology to further reduce labor costs will not only meet these challenges but generate a $4.9 million surplus and possibly lower the property tax levy another 6 percent this fall.

It was the fact that the village’s reserves had sunk to only $9.8 million — about a month and a half of operational costs — that triggered the village to levy its first property tax in late 2009, just after the height of the recession.

The village is now climbing back to what’s considered a healthier reserve level — about 25 percent of the previous year’s general-fund spending.

“This year we’re focused on building reserves and preparing for uncertainties,” Fritz said.

The village is expecting to have reserves of about $23.2 million by the end of April 2012, about $10 million of which is coming from the 2010-11 budget year with the assistance of the property tax.

Though the village has not had to resort to layoffs, it has eliminated 120 positions through attrition since 2003 — eight of them during the past year.

The process of reducing the workforce began when a 10-year trend of slowing sales tax growth was identified, making it clear that the staffing levels of 2003 were unsustainable, Fritz said.

Since then, the village has and continues to use technology to help serve customers in a way that only paid staff members could before. For instance, more and more questions and services can now be addressed by the village’s website, Fritz said.

A challenge of the near future is that about 60 percent of the village’s remaining staff will be eligible for retirement within the next five years. While the replacement of senior employees with younger staffers may have a positive impact on finances, there also needs to be a balance to ensure that essential experience and know-how is retained, he said.

Schaumburg is joined with other municipalities in lobbying the Illinois legislature to leave their share of the state income tax alone, Fritz said.

While the new budget might be able to sustain a $1.8 million loss, such a permanent revenue reduction could not be, he said. In some ways, Schaumburg is probably more affected by the proposal than most because it is trying to reduce its property tax, while many communities are accustomed to raising it every year to meet new demands, Fritz said.