Elgin council gives preliminary OK to budget plan

The Elgin City Council gave a preliminary thumbs-up to a 2016 general fund budget that includes a smaller property tax bill increase than what was initially proposed by city staff members.

The alternative budget, which keeps the property tax levy flat, is a result of what some council members called "sticker shock" from last month's proposal.

The new budget accounts for an average increase of $138 including pension and debt payments - which appear on property tax bills - plus utility and refuse fees, down from $194.

Last month, city staff members said the overall proposed increase was $218; on Wednesday, they said that was a miscalculation. Councilman John Prigge cast the only dissenting vote at Wednesday's committee of the whole meeting.

Still, resident Marcy Wojak said, these are difficult times with people on fixed incomes. "It's rough. It's really rough," she said, exhorting the council to make more cuts.

The $138 increase includes $120 for public pensions and debt payments and $18 for utilities and refuse fees, Assistant City Manager Rick Kozal said.

To that end, a budgeted increase in water and sewer fees was lowered by $1.3 million. The city also plans to use $1.2 million in reserves, which by the end of 2016 would be down to $40.3 million, or 34 percent of operational costs, Kozal said.

That would still allow for $15 million in street repairs and $10 million in water and sewer improvements in 2016, Kozal said. However, utility fees will have to be raised in the future to continue paying for capital projects, he said.

Councilman Toby Shaw unsuccessfully proposed keeping the refuse fee flat in 2016 - as Elgin did this year - at an additional $535,000 or so cost to the city. That would amount to "kicking the can down the road," Councilwoman Tish Powell said. The city makes no money from refuse fees, which pay for the contract with Waste Management.

Prigge proposed his own alternative budget that would cut expenses such as payments to the Elgin Area Chamber of Commerce and the Elgin Area Convention & Visitors Bureau, and the amount of snow plowing on side streets.

Along with an infusion of $10 million from reserves, that would yield a $280 decrease in overall average property taxes, Prigge said.

But while the math may work, that would also create a structural deficit residents will have to pay for in the future, City Manager Sean Stegall said.

Prigge's proposal "panders" to residents and sets up a future financial crisis, Councilman John Steffen said. "You're trying to tell people what they want to hear, not what they need to hear."

A typical household in Elgin pays $395 less in taxes and fees compared to the average among 14 comparable suburbs, Valdez-Wilson said. The city used 2015 data for the analysis - which included Hoffman Estates, Arlington Heights, Aurora and more - and accounted for differences such as fire and parks departments versus districts.

Based on a home's equalized assessed value of $50,430, Elgin's yearly property taxes are $72 lower than the average among those 14 communities, or $1,169 compared to $1,241, Valdez-Wilson said.

The budget includes $1 million in additional police and fire pension payments. Council members decided to examine in the fourth quarter of 2016 whether the city could contribute even more money to public safety pensions.

Councilman Rich Dunne pointed out the city might be getting more revenues from selling municipal water as contracts with other communities are negotiated.

The state's future actions might heavily affect Elgin's finances, Kozal pointed out. If property taxes are frozen and the local share of income tax is cut by 50 percent, Kozal said, the city will be faced with a $12.3 million deficit by 2018.

The city council will continue budget discussions during a special meeting at 9 a.m. Saturday at the Centre of Elgin, 100 Symphony Way.