Elgin City Manager Sean Stegall assured council members Wednesday a $652,000 surplus in Elgin’s 2011 general fund does not mean there is extra money.
City officials originally projected a $4.5 million budget deficit in 2012, which ballooned and became the basis for major changes to the city’s finances, including utility taxes, an alcoholic beverage tax, higher sales taxes and a refuse fee.
Chief Financial Officer Colleen Lavery said the city expected to need to tap into its savings in 2011, but three main sources ensured that didn’t happen: unbudgeted grant funding, higher sales tax revenue and late payments from Cook County that should have been paid in 2011. Lower overtime costs — largely because of the mild winter — also factored in.
Stegall called the surplus “working cash carry-over,” emphasizing its presence in the next year’s budget as a revenue source like sales tax or property tax.
“It’s not a pot of gold sitting at city hall that can be used to do additional services,” Stegall said.
Unlike most surrounding communities, Elgin prepares a five-year budget, which allows it to plan from projections. The practice requires long-term estimates that many community members opposed to new taxes and fees have criticized as being unreliable.
While Stegall said being one of the few with a five-year plan is a source of pride for the city management, council member John Prigge brought up his idea for a “rip cord” budget, where tax increases would only take effect if the revenue proved necessary with final numbers rather than projections.
No other council members spoke in support of Prigge’s plan, pointing to the importance of strong bond ratings — recently announced at the AAA level by Fitch and AA+ by Standard & Poor’s — that referenced Elgin’s strong financial management and long-term planning.
But conservative revenue projections do leave the city open to surpluses should the economy improve, a reality council member Anna Moeller said will not leave residents paying too much overall.
“If we find out we are generating revenues we had not anticipated, we can decrease our reliance on a relatively high property tax rate,” Moeller said. “We’ll be in that position because we did the hard job this past year.”
In 2010, almost 47 percent of the city’s total revenue came from property taxes. To diversify and reduce that to 32 percent by 2015, the council plans to replace property tax dollars with revenues from new taxes.Copyright © 2013 Paddock Publications, Inc. All rights reserved.