Economy takes toll on St. Charles budget

St. Charles officials cited a weakened economy Monday as one reason they anticipate a $650,000 budget deficit in the upcoming fiscal year.

City Administrator Brian Townsend said he expects to see sharp decreases in sales, income and telecommunications tax revenue that reflect bleak economic forecasts across the country.

While the city will be able to offset shortfalls by digging into reserves set aside for economic downturns, Townsend acknowledged rocky times might be ahead.

"There's no question that this year has presented some challenges to us," he said in a preliminary budget report to the city's government operations committee. "But this is something we (on the city staff) all feel is a good budget."

The city is anticipating about $128 million in revenue and $134 million in expenditures for fiscal 2008-09. The deficit is far less than those numbers suggest, Townsend said, because of money already set aside for several ongoing capital projects.

And while revenue is expected to sink just below the $128.5 million that the city took in just two years ago, industry-wide increases in gas prices and employee benefits are pushing expenditures higher than ever.

"Many other communities are in worse situations than we are," Townsend said.

The fiscal budget is expected to be voted upon at an April 21 council meeting after a public hearing at city hall, 2 E. Main St.

The financial document calls for no changes to city tax rates, but it does include 3.5 percent rate increases for water and sewer service, and a 6 percent rate increase for electricity. The latter reflects hikes in wholesale power costs, Townsend said.

The rate increases would bring annual utility costs for the average St. Charles resident to $632.51 for water and sewer service, and $1,085 for electricity, officials estimated. But Townsend said the rates would remain "extremely competitive" compared to those in neighboring Batavia, Geneva and Naperville.

The city also has earmarked $19 million for capital expenses, including the First Street redevelopment project, the construction of a new downtown fire station, and the construction of an intersection at Randall Road and Woodward Drive, which is in anticipation of incoming business developments.