Why Elgin is still spending in the downturn?
Elgin this week laid off 11 workers in an attempt to chip $1.2 million off next year's budget deficit, which is at least $5.5 million.
So if the city is short on money, why is it still spending millions on big ticket items, like street and sidewalk reconstruction for the downtown area?
Why not halt that work and other projects until the economy improves?
It's questions like these that constituents have peppered Elgin City Council members with as the city has had two rounds of layoffs in the past year, raised fees and axed spending, including eliminating the city's July 4 fireworks.
In many cases, city leaders say, funds are restricted to certain uses. And city council members believe spending now will benefit Elgin as a whole in the long run.
"We can't just retrench and not do anything," said Councilman Robert Gilliam. "Some people we will say, 'We can't spend money on anything.' I think that's the wrong attitude to have. You can't cut your way to prosperity."
Then perhaps the city is trying to spend its way to success.
For example, the downtown streetscape project is funded through a special taxing arrangement called a Tax Increment Financing District. TIF districts are set up to help redevelop blighted areas, and funding can only be spent in the actual area itself instead of employee salaries.
The city began underground utility work in the downtown core in 2006 and aboveground street work on the $31.5 million plan will wrap up by 2012.
"That's where that money has to be spent," Councilman Mike Warren said.
City leaders say a revitalized downtown will boost the community in many ways, starting with a better image and higher property values and ending with restaurants and shops bringing in more and more in sales taxes.
When the Grand Victoria Casino opened in the mid-1990s, Elgin city leaders established a policy to use its revenues only for one-time capital expenses and not employee salaries.
Elgin Mayor Ed Schock said the city of Aurora made a "huge mistake" and used its proceeds from the Hollywood Casino for salaries.
The city of Aurora eliminated 100 positions in September and faces a budget deficit next year of $19 million.
Over the years, Elgin leaders have collected their share of praise and awards for this policy. The city has used casino money for a variety of uses, including building Festival Park, buying fire trucks, establishing a nonprofit foundation and doling out home improvement grants to residents.
Still, with the Des Plaines casino expected to open in 18 to 24 months, Elgin leaders are bracing for a 30-percent drop in revenues. The city will collect about $16 million to $17 million from the casino this year, which is a far cry from the $29 million high mark several years ago.
Elgin City Manager Sean Stegall said it would be difficult to find a scenario in which he would recommend that the city use casino money for salaries.
"We are dealing with the worst financial downturn since the (Great) Depression. It would have to be worse (than this)," he said.
Stegall has pledged to present council members with a balanced budget by Nov. 4. The council has follow-up meetings on Nov. 11 and 18 and Dec. 2 before a final vote on Dec. 16.