Reserves, cost cuts to get Schaumburg through year

Another bleak financial year is forecast in Schaumburg's proposed 2009/2010 budget, but one free of employee layoffs or any possibility of a municipal property tax being considered.

Village officials are projecting a $4.4 million deficit for the fiscal year beginning May 1, and that the just ending current fiscal year will produce a $6 million deficit.

The deficit projection for the next fiscal year initially was $12 million, but it was scaled down back after much belt-tightening, including freezing 25 jobs left vacant by retirements as well as freezing the salaries of current employees.

"We've never started off $12 million in the hole," Village Manager Ken Fritz said.

This is the third year in a row the village will operate with a deficit. The village also ran deficits from 2001 to 2003, but those deficits weren't as severe.

The village has wisely saved its money and is able to rely on its reserves to cover the deficits for a limited period of time, said Trustee Tom Dailly, who chairs the village's finance committee.

"What (change in services) residents will see for this coming budget is minimal," Dailly said.

As the village got the first real taste of the economy slowing down last year, it adjusted its budget accordingly, he said.

Some nonessential services are being abandoned in the year ahead, including the police department's Officer Friendly program, the brush pickup program and the Citizens Bike Patrol for kids.

The village will end the current fiscal year with an unreserved fund balance of $28.2 million, equal to 34 percent of annual expenditures from the general fund. It expects to end the coming fiscal year with a balance of $23.8 million, or 27 percent of the general fund. It's been village policy to aim for a balance of 40 percent to serve as a reserve for emergencies or times of need.

Still, officials believe it's worth reducing the reserve to hold back from laying off staff or imposing a property tax.

Dailly said layoffs as a quick fix carry with them the expense and effort of refilling positions after the economy recovers, having already lost people with valuable experience.

And the village has long been known for its lack of a municipal property tax. If one was adopted to fill a temporary need, there's a danger it could not so easily be got rid of, Dailly said.

He believes that the village has at least another year to see how things are going before it would even have to start thinking about such a possibility.

Mayor Al Larson said he remains the village optimist, who believes things will turn around very quickly when the economy starts to improve, probably in the fall.

Being reliant upon sales tax and other consumer taxes has helped the village move a good part of its tax burden off residents and onto visitors, Larson said. But it's also made the village's fortunes more sensitive to the state of consumer confidence, he added.

Budget adjustments to the village's cultural services department, which runs the Prairie Center for the Arts and special events like Septemberfest, have been proportional to every other department, Dailly said.

So many of the cultural services department's activities break even that to shut down the Prairie Center and cancel every special event would only make Schaumburg a colder place while solving none of the current financial challenges, Dailly said.

The village board will vote to adopt the new budget at its April 28 meeting.