State budget impasse leaves Carpentersville uncertain about revenues
Facing increased public pension contributions and uncertainties over state revenues, Carpentersville officials are seeking a 4.6 percent property tax levy increase - and say they may have to consider additional budget cuts in the future.
The village board Dec. 1 will vote on a proposed tax levy hike, and on a proposed $52.5 million budget for next fiscal year, which begins Jan. 1.
If the levy increase is approved, the village would collect $13 million in property taxes for 2015 - $568,115 more than the previous year. Homes with a market value of around $200,000 would pay roughly $86 more in property taxes, Finance Director Hitesh Desai said.
The increase is mostly attributed to an anticipated $358,165 increase - or 11.57 percent - in public pension contributions, Desai said.
The proposed budget includes a $861,587 deficit in its general fund, largely because revenues are budgeted conservatively with the hope that sales taxes and other major revenue streams will generate more money than planned, Village Manager Mark Rooney said.
But Trustee Paul Humpfer said the deficit could grow if the state reduces or eliminates the money going to local governments. Carpentersville currently receives $3.6 million.
"If we saw that money wasn't going to come in, we're going to have to hold off on some of the expenditures we have," he said.
The purchase of large equipment and vehicles and other nonessential projects would likely be the first to be deferred, officials said.
"It's really based on need," Humpfer said. "If there's something we don't absolutely need, we won't spend it."
Property taxes are the largest source of general fund revenues, followed by sales taxes and income taxes. The projected sales tax revenue also assumes that the new Wal-Mart will bring in about $600,000 in 2016, Desai said.
"If the revenues are not coming the way it should ... we might come back to the board with some of those potential cost reduction items," he said.
The village budgeted $29.9 million for operating costs, which includes $11.5 million for the police budget and $6.5 million for fire department expenses. Streets make up $2.3 million of that fund.
Additionally, $4.3 million in operating costs will be loaned to the village's tax increment financing fund to pay Wal-Mart as part of the village's redevelopment agreement. Future property taxes generated above the frozen amount going to local governments would go back into the fund.
Carpentersville ended its fiscal year 2014-15 with a $1.1 million surplus, some of which is being transferred into the motor fuel tax fund to pay for road maintenance and infrastructure projects, Desai said.
He added that the village's general fund had roughly $7 million in reserves as of April.
"I think we're OK from a financial strength perspective in being able to provide funds for this budget," Humpfer said.
Carpentersville recently received an Aa2 bond rating from Moody's Investor Service, as well as its first Distinguished Budget Presentation Award from the Government Finance Officers Association.
Trustee Kevin Rehberg said residents should not expect to bear the brunt of any setbacks from the state, unless it's extreme. The village will decide within its own budget how to compensate for reduced revenue, he said.
"This isn't something where we're going to be going back to the residents and dipping into their pockets for more money," he said. "This is something where we're going to have to make the tough decisions and make sacrifices in our expenses."