Elgin city manager: 'Tougher decisions' ahead on budget
Elgin city staff members began presenting their case at a special council meeting Saturday for why either revenues will have to increase or services will have to be cut next year.
City Manager Rick Kozal said the city will be facing "a crossroads," and the council will have to decide to continue to invest in the city and the services it provides or "retreat and offer less," he said.
"We are going to have tougher decisions moving forward," he said.
City staff members have worked diligently to keep expenses in check while the cost of goods and salaries keep rising, Kozal said. "There is no department in the city that isn't looking for ways to do more," he said.
The city used $3.5 million in reserves to balance its $118 million general fund this year, part of the overall $298 million budget. Elgin Chief Financial Officer Debra Nawrocki said, "We can't do that year after year and that's what we are starting to address now."
The council in 2015 set a policy of gradually spending down reserves to no less than 30 percent of operational expenses. At the end of this year the general fund was projected to have $37.9 million in reserves, or about 32 percent of expenses.
It's important to have cash on hand, Nawrocki said, because revenues don't come in regularly and salaries - the city's largest expense - need to be paid.
"At the end of May our expenditures exceeded revenues by over $12 million," she said. "That's where we need to have those reserve funds to cover that time period, before those taxes come in."
Elgin has kept its general fund property tax levy flat since tax year 2015, increasing its levies only for pension and debt payments. This year, city officials minimized that increase by using $1.2 million from its debt service and Illinois Municipal Retirement System funds.
Councilman Rich Dunne asked what the city's property tax levy will be next year.
"We really need to have the entire picture before coming back to the levy. Again, not wanting to levy $1 more in taxes than we need," Nawrocki replied.
Nawrocki also said it's too early to say whether the city's financials might be over or under budget this year. She did say a projected increase in health insurance costs came in $1 million under budget, but July's storms were an unexpected $500,000 expense.
Police and fire pension fund investment returns are about 9 percent and 10 percent, respectively, as of July, above the projected 7 percent, she said. Both pension funds are about 43 percent funded and have enough money to cover pension benefits for the next 12 years. State law requires 90 percent funding by 2040.
Saturday's meeting was held in the lobby of the Hemmens Cultural Center, which Kozal and council members said is a more relaxed environment for special meetings where no decisions are made.
Five residents attended the meeting, including a woman who told the council she was unhappy she couldn't hear the discussion very well and couldn't see the screen presentation because audience tables were to the side.
Kozal said he'd remedy that for special budget meetings Sept. 16 and Oct. 7.