Palatine's proposed budget includes layoffs, tax hikes

Palatine's proposed 2011 budget is, as Councilman Scott Lamerand put it, the best the village could come up with considering the cards it was dealt.

And the hand isn't very good.

In addition to eliminating up to 12 positions, residents likely will be subject to a new electricity utility tax, a higher water rate and slight bump in property taxes in order to balance the budget.

“We don't take increasing anything to our residents lightly,” Lamerand said. “There were a ton of cuts and a ton of pain. The budget is bare bones.”

The 2011 operating budget will increase 0.5 percent to $61.7 million due to an $843,000 spike in the village's public safety pension obligation. If not for that, it would have dropped by $540,000. The overall budget including capital projects, debt, insurance and tax increment financing districts is down 20 percent to $101.1 million, mostly due to 2010 bond issues for the new police station and Quentin Road fire station.

Palatine will use about $300,000 in reserves from its “rainy day” economic stabilization fund, but residents will make up for most other shortfalls.

The new utility tax, which Village Manager Reid Ottesen said is issued by numerous municipalities, is based on consumption and will cost the average household $42 per year. It's expected to bring in $900,000; Palatine is expecting $900,000 less in state income taxes.

Palatine also will raise the 2011 levy by 3.99 percent, which will cost homeowners an additional $40 on their property tax bills, in order to fund the pension increase. The third significant cost to residents is the water rate, which will increase from $2.24 to $3 per 1,000 gallons used. Ottesen noted the rate is still 40 percent below the Chicago region's average.

Nearly every source of revenue is significantly down from last year. Aside from state income taxes, the hardest hit area is a 13.5 percent decrease in projected sales tax receipts. Construction has shuttered one of the village's red light cameras, resulting in $150,000 less in fines, and the motor fuel tax is expected to generate $1.5 million, down 26 percent.

It's anticipated that up to 12 positions will be eliminated, saving the village between $1.6 million and $1.8 million. They're still being identified.

Last year, the budget called for seven positions to be eliminated, four of which were part-time.

“The proposed budget directly reflects the impact of the economic climate confronting the nation,” Ottesen said. “There are very few signs that the improvements seen nationally have taken hold within our local economy.”

Residents can comment on the budget at the Nov. 15 meeting. A public hearing will take place Dec. 6 and the council will adopt the budget Dec. 13.