Hawthorn Woods seeing red again

For the second time in nearly four months, the village of Hawthorn Woods is trying to shore up a budget deficit.

Village board members learned Tuesday the village has a $760,000 revenue shortfall -- a total equal to about $89 for each of its 8,500 residents -- and ordered department heads to look for ways to save money.

"We are looking at every single item of spending we have and considering all of our options," Mayor Keith Hunt said Wednesday. "Over the next week or so, we will formulate a plan and implement it immediately to minimize the effect."

Hunt said the problem is the slowdown in new home construction and a significant drop in building permits for development.

"We are not unique in this situation," he said. "This is happening to a large number of villages around. The housing market is bad right now."

Those were the same factors cited in November, when village officials discovered a nearly $750,000 shortfall. The village made up about half that amount with budget cuts and staff layoffs. Three police officers, two building department workers and three public works employees were cut. The difference was to be made up this year by continuing those cuts.

At the time, Hunt said the village should be fine financially through the fiscal year.

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.

One of Hunt's opponents says the mayor ignored signs the housing market was softening and village revenue would decline.

"Keith knew the housing market was bad," said Trustee Steve Riess. "Yet, he hasn't done anything to curtail spending to adjust for the market."

Riess said the village should have curbed spending after having to borrow money to complete the village pool in 2007 because developer contributions were not coming in as expected to cover the project.

"That should have been the wake-up call right there," he said. "We also received memos from our former finance director three times that said revenues are not where they should be. But, at the time, Keith always said everything was fine."

However, Hunt said the downward trend became worse than expected.

There has been a "rapid increase in the rate of decline" in the number of permits issued in the village, he said, and spending fell off more than he could anticipate.

Building permits were down 25 percent in the summer of 2007 compared to 2006. Permits were down 70 percent this winter compared to the same time in 2006-07, he said.

The village issued 10 permits in December 2006, but only three in 2007. It issued 16 permits in January and February 2007, but only one in the same span this year, he added.

"This is totally on the revenue side and has nothing to do with overspending," Hunt said. "We are going through a storm right now and we need to weather that storm. But I can assure everyone we're taking appropriate measures to address the situation."