Elgin water rates could increase slightly

Elgin's proposed budget for 2017 includes a slight increase in water rates - which have stayed flat for five years - but city leaders aren't sharing details yet about any property tax increase.

The proposed budget includes a gradual increase in water rates so that by 2021 average monthly bills would go up to $40 from $35, City Manager Rick Kozal told the city council this week. By comparison, monthly water bills in Aurora are an average $46, he said.

The proposed budget will be presented at the next city council meeting on Wednesday, starting with a discussion about the general and riverboat funds, Kozal said. The city plans to use a portion of its reserves to keep the general fund tax levy flat, he said. However, the city's police and fire pensions tax levy requirements are projected to increase by about $2.1 million, Chief Financial Officer Deb Nawrocki said last month.

"The staff will be working through the weekend and into Monday to complete all components of the proposed 2017 budget," Kozal said.

Nawrocki said the increase in required public safety pension contributions largely stems from changes in actuarial calculations of mortality. The city's public safety investment funds also did more poorly that expected, with returns of less than 1 percent compared to a projected 7 percent return. This latter factor, in conjunction with demographic changes, accounted for about $429,000 of the total increase, Nawrocki said.

This year's pension investment returns are doing much better, at 7 percent for police and 5.8 percent for fire as of Sept. 30, Nawrocki said.

This year, Elgin got lower-than-expected revenues from sales and income taxes, along with a weather-related drop in natural gas taxes, Kozal said. The city also had to contend with higher-than-anticipated health insurance costs, he said.

Nawrocki worked with city department heads to find ways to shift funds and rein in expenses, Kozal said. The result is a modest $200,000 shortfall in this year's general fund budget - which pays for the city's day-to-day operations - with $119.7 million in expenses, he said.

Sales tax receipts are soft across Illinois for several reasons, including lower gas prices, slow wage and population growth, and non-taxed services becoming a larger share of people's expenses, Illinois Department of Revenue officials said. Also, income tax rates went down in 2015.

Elgin is forecasting declining sales and income tax revenues next year, too, and will be budgeting for a 16 percent increase in health insurance premiums, Kozal said. The city will spend down its reserves to keep the general fund property tax levy flat at $27.8 million, he said.

"Because of proper planning, we have those reserves to be able to soften the blow," Councilman Rich Dunne said.

The city's policy is to keep reserves at 30 percent or above of operational expenses. As of last month, 2016 was expected to end with $41.4 million in reserves, or 35 percent of operational expenses.