Elgin's budget goes from ugly to just bad

The city of Elgin has had a longtime policy for only using casino revenues for capital projects, grants and one-time purchases instead of ongoing expenses, such as employee salaries.

So should a $670,000 payout last summer to buy a year's worth of road salt in advance be cause for concern?

Not exactly, city leaders say.

"This was a one-time expenditure," said Jim Nowicki, the city's finance director.

City leaders recently reviewed their first-quarter figures for 2009, but they aren't about to change their policy and use casino revenue for basic services.

Overall, the city's $79 million general fund showed a deficit of $224,000 for 2008, but that's only after the city moved about $2.9 million from other sources to shrink it.

Revenues are down in all categories - property taxes, permit fees, service fees and investment income.

The city has trimmed expenses through layoffs, early retirements, cutting back on events, festivals and customer service hours.

"I'm optimistic we'll end the year right on track where we're supposed to be," Nowicki said. "I think we'll weather the storm in 2009, but there's no clear bets on 2010."

The city also shelved some $5.4 million in projects for this year that were going to be paid for through casino revenue.

Some of the big ticket items put on hold were: equipment replacement, beautification of city entryways, a Wi-Fi project, and upgrading the city's emergency radio system.

The smoking ban and sagging economy didn't do the city any favors on the casino front. The city's share of casino revenue was about $19.1 million in 2008, a drop of more than $5 million from previous years.

Assistant City Manager Sean Stegall said the city must be prepared to take quicker steps to cut expenses if the economic climate changes for the worse.

He also said an overall drop in total property values could lead to the city collecting less money via property taxes in coming years.

"To make a long story short, there are many difficult decisions ahead. But the ones the council has made in recent months have paid off. They have turned a very ugly situation into just a bad situation," Stegall said.

"At the end of the day, we hope to come out of this in better shape than the communities we compete with."

City leaders will review the 2009 second quarter figures in July.