Hoffman Estates digs into its reserves to stay in black

The proposed state budget cuts means Hoffman Estates officials need to adjust the village budget.

Earlier this month, Gov. Pat Quinn's office proposed a roll back of municipalities' share of income taxes from 10 percent to 7 percent.

The rollback will cost cities and villages $300 million statewide and it would cost Hoffman Estates alone $1.2 million.

Hoffman Estates budget consultants also project that 2009 revenue shares from income tax and telecommunications tax will be $1.3 million short because the state is late with its payments. Finance Director Michael DuCharme said the state is three months behind in paying the village's its share of the two taxes.

Based on the shortfall, the village's general fund reserve will drop from about $11 million to about $8 million. The village requires its general fund reserve to have a minimum balance of 25 percent of its total general fund, which is used for day-to-day expenses.

The state's tardiness with its payments will leave the general fund below that 25 percent level. That forced the village to change its requirements, and on Monday the board approved a new 18 percent minimum balance.

"This has absolutely nothing to do with anything in the village," DuCharme said.

The Hoffman Estates board established the 25 percent minimum in 2000. The village will take $1.1 million from the reserve fund to ensure a balance budget for 2010. DuCharme calculated the amount the village will likely need to balance the budget in the future in coming up with the 18-percent figure.

The village is used to dealing with the state being behind in its payments.

"I have no idea when we're going to receive them," DuCharme said.

"Or if," added Trustee Karen Mills.

Minimum reserve levels help villages in case of a financial crisis. DuCharme said changing the level is just a matter of being captious.

"We have to take a conservative approach at this point," Mills said.