Housing crisis forces Hawthorn Woods to cut staff, projects

Victims of the foul housing market continue to pile up, with the latest casualty being the village of Hawthorn Woods' balance sheet.

Village officials blame a slowdown in new development for a nearly $750,000 shortfall that has led to layoffs and imminent cuts.

To address the problem, the village on Tuesday laid off eight employees: three police officers, two building department workers and three public works employees.

It wasn't an easy decision, village officials said.

"The last thing we wanted to do is ever have to lay off any of these people," Mayor Keith Hunt said. "The very first guy I met with has got four kids. What do I say?"

Officials say most village revenue comes from new developments that generate fees and donations, and there aren't enough businesses in the village to create sales tax income that might offset dips in real estate sales.

"It makes us more susceptible and more vulnerable to fluctuations in the home-building industry," he said.

Officials said the village is getting only about 40 percent of the revenue it projected in its budget this year. That means the general fund will be more than $738,000 short if nothing changes.

The village also is eliminating a proposed splash pad at the new aquatic center, is cutting programs like movie night at the village barn, and will defer buying items like new police cruisers and public works equipment.

The board members and the mayor will also forgo their salaries.

In all, the cuts are expected to save about $336,000 a year, according to Hunt.

"At this point, our responsibility is to control what we can control," Trustee Cliff Wright said. "All we can do is control the expenditure side."

Hunt said the cuts and layoffs will be enough to get the village over the budget crisis. If the measures are carried over into the next fiscal year, he said, they'll create a surplus that will make up for the $402,000 not covered this year.

"I feel absolutely confident at this time that we have adequately addressed the situation," Hunt said. "This is intended to be a one-time cut. This is not the tip of an iceberg."

But Trustee Steve Riess disagreed, saying he sees future financial problems stemming from overspending in the village.

He said the village has been "ignoring the signs" for some time that a housing crunch was coming, citing an April report by the village finance director that said revenue was coming in slower than expected.

"(Hunt) has paid no attention to spending whatsoever," Riess said. "The signs were there."

He said the village still owes money on the $6 million aquatic center that opened in June.

"We've got debt obligations for the pool fund I don't believe we'll be able to meet.," Riess said.

Hunt said the village's financial problems have nothing to do with the aquatic center.

"One has nothing to do with the other," Hunt said. "The aquatic center was funded entirely by developer donations. … Those funds are not available for general revenue purposes."

Trustee Jim Silvers, who heads up the village finance committee, agreed and said assertions about overspending aren't borne out.

"The finance director brought the shortfall to the mayor's attention and he immediately took action to stem the bleeding," Silvers wrote in an e-mail. "Unfortunately, when the majority of the village's spending is on salaries, that is where the cuts need to be made"

Hunt added the village will examine every expense to see if it can be reduced or eliminated.

"It is unfortunate that we had to do this," Hunt said. "But at the end of the day, it's the right thing to do for the village, it's the right thing to do for the residents."