Hoffman Estates proposed budget in deficit, but revenues stabilize

Hoffman Estates is hoping that selling the old police station will help the village pay off the latest installment of the Sears Centre construction loan.

The Sears Centre presents just a portion of the proposed $107.8 million 2011 budget. Officials previewed the budget on Monday, with the board set to vote on it next week.

Proposed is a 1.3 percent increase in revenue and a 15.3 percent decrease in spending from 2010s budget.

The village expects to dip into its reserves, as officials project a $4.8 million deficit with $103 million in revenues and $107.8 million in spending.

Still, there is good news, said Village Manager James Norris, as 2011 is expected to mark a stabilization in revenue, which has declined since 2008. The 2010 budget featured $101.7 million in total revenues and $127.2 million in total spending.

For the second year the Sears Centre is part of the village budget. The village inherited the responsibility of paying the 2004 $55 million Sears Centre bond issue when it took control of the 11,000-seat arena in December 2009. The original owners, the Ryan Companies, left after the arena failed to turn a profit.

Officials have made no mention of a property tax increase that many residents fear. With interest, the bonds could cost $88.4 million over the next two decades, although village officials say they can eventually refinance the bonds and owe less.

Until then, next year the village owes $3.9 million for the bonds. Besides the $2.3 million the village hopes to get from the sale of the vacant police station at 1200 Gannon Drive, village officials will transfer $600,000 in surplus from the operating fund. Once more they'll have another $1 million from Sears Holding Corp. for the arena's naming rights.

At the start of the year, officials projected the Sears Centre would lose $1.1 million, but a boost in bookings has lowered the expected loss to $392,658.

Next year the loss is anticipated to be $569,000, but Trustee Gary Pilafas doesn't put stock in that estimate.

“We've already overcome $1.1 million,” he said.

Norris said that if not for the annual $3.9 million bond payment, the Sears Centre would make a $90,572 net operating profit at the end of 2010, which would be the first such profit in its history.

However, in 2011, the village again estimates losing $71,900 in net operations. Part of that loss is attributed to hiring more employees for the arena, as General Manager Ben Gibbs said they've accomplished much without adequate personnel.

As for the overall budget, Norris and other village officials described next year as stronger financially for Hoffman Estates. In the general fund, officials project $45.8 million in revenue and $46.7 in expenditures. That means 4.6 percent in increased spending over 2010, and 5.1 percent higher revenue.

Last year at this time, the village threatened layoffs in the fire, police and public works departments unless they made budget reductions. The fire and public works unions made cuts and avoided layoffs. The police union declined and the village laid off four police officers on Jan. 1, 2010.

Trustee Karen Mills said, however, that patrol manpower will remain the same.

“Even with the layoffs of 2010 we've maintained our current staffing levels on patrol as it has been for the last several years,” Acting Police Chief Michael Hish said.

Overall, the police budget is an outlier versus other departments which have reduced spending. They're scheduled for a 0.7 percent increase in 2011.

One way the police department will seek revenues is through red-light cameras. No breakdown of how much money the cameras would produce in tickets was provided on Monday, but two years ago estimates had about $300,000 per year.

Hish said the first camera will likely be installed in January at Higgins and Barrington roads. The village first proposed cameras in 2008, but problems with the vendor and securing permits delayed the installation of cameras at five intersections.

An indication the economy hasn't recovered is that the village continues to issue fewer building permits. In 2007 the village received more than $2.2 million from the permits. They've projected a little more than $500,000 for 2011.