Growing pension contributions a concern in new Lake Zurich budget

While Lake Zurich officials are pleased with a projected modest operating surplus in the general spending section of next year's budget, they acknowledge financial challenges remain, including police and firefighter pensions.

Village board trustees Monday night voted 5-0 in favor of the new $46 million budget that starts May 1 and runs through April 30, 2016.

Similar to other towns, Lake Zurich's general fund is the main funding source for operations. Village Manager Jason Slowinski said "for the first time in several years," the general fund isn't expected to slide into the red.

General fund revenue of $27.7 million is forecast to exceed expenditures by about $5,100.

Trustee Jim Beaudoin complimented the work that went into the budget, which he said includes funding for street repairs, removal of trees infected by the emerald ash borer, water main upgrades and a new ambulance. He said residents are not shortchanged by the village trying to hold a line on spending.

"This budget not only is balanced, but we have a huge surplus of ($5,100)," Beaudoin said. "We address a lot of the infrastructure needs that have been neglected for years for the residents in this as well."

But there are money concerns, with village budget documents citing Lake Zurich police and fire pension costs that continue to rise. Lake Zurich has set aside about $3.3 million toward fire and police pensions in the 2015-16 budget, up from $600,000 in 2008-09.

Another concern raised by the village is a proposal from Gov. Bruce Rauner to reduce municipalities' share of state income taxes. Lake Zurich's general fund revenue would take a $1 million hit annually if Rauner's proposal received support from lawmakers.

Police and fire pensions are funded at 45 percent and 54 percent, respectively, according to the village. Towns have until 2044 to bring the pension funding to 100 percent.

On the positive side for the 2015-16 budget, said Slowinski, the village avoided a "fiscal cliff" related to debt repayments associated with a long-stalled downtown revitalization effort that could have cost the general fund $700,000 to $1.3 million per year.

In December, Lake Zurich received General Assembly approval to extend the life of a special taxing zone that's meant to spur downtown redevelopment. With the tax increment financing district set to expire in 2025, the village received a 12-year extension.

Lake Zurich officials said the village's overall financial position will be strengthened by refinancing TIF-related debt at lower interest rates.