Buffalo Grove financial forecast shows potetial deficits

Like the weather picture you see on your local news, Buffalo Grove’s five-year financial forecast shows conditions could be worse in some areas than others.

Finance Director Scott Anderson delivered the forecast to the village board this week, emphasizing that the presentation is not necessarily a guarantee of what the future holds and that officials will be working to balance the budget over the next half decade.

On the operations side, Buffalo Grove has been balancing revenues and expenses, Anderson said. It should continue to do so over the next five years, though in year five, fiscal year 2018, expenditures are expected to outpace revenues by $126,000.

On the capital side, however, things could start to get stormy. Anderson projects that the village may need to reach into its reserves to meet capital expenses for vehicles, technology, facilities and infrastructure improvements, as well as subsidies for the village’s two golf courses.

In 2014, that could result in a $1.5 million deficit, followed by deficits of $1.1 million in 2015, $1.4 million in 2016, $1.7 million in 2017 and $2.1 million in 2018.

Overall, it could amount to a deficit of $8 million — unless the village finds revenue to avoid it.

Anderson said the deficit would essentially be the result of the village paying itself, including transfers to the golf fund, after years of holding off on its capital needs as a result of the recession. Although golf would add to the deficit, built into the forecast is a reduction to the golf subsidy each year, from $150,000 in 2014 to $25,000 in 2018.

There are significant building needs, he added. For example, funding will be needed to repair roofs.

“About 80 percent is essentially investment in ourselves and our assets,” he said.

Trustee Steven Trilling sounded Anderson out on a possible scenario for raising funds. Assuming that interest rates are relatively low and the village’s bond rating remains as high as it can get, he asked what the impact would be of borrowing the money to use as the village needs.

“I think it’s a slippery slope that you’re borrowing money to meet operating expenses,”

Anderson responded. “It starts getting into borrowing to pay for your groceries essentially.

“Ideally we would try and work more toward right-sizing the organization so we can invest in ourselves as opposed to borrowing money,” he added.