Lake Zurich budget leaves questions unanswered

Lake Zurich officials say the village will be able to trim a $2.5 million deficit in their proposed budget for the 2012-13 fiscal year without major service cuts, but the plan leaves most of the village’s long-term financial challenges unanswered.

The village board opted for a “bridge budget” that includes expense cuts considered unsustainable in the long run, buying Lake Zurich more time to try and solve the money issues that have plagued the village since the economic downturn.

Lake Zurich trustees are expected to approve the budget at a special board meeting Thursday. The new fiscal year begins May 1.

The proposed budget will increase almost 1 percent over the current budget to about $45.5 million, but revenues and other funding sources are expected to fall more than 2 percent to about $43 million. The $2.5 million gap will be covered by putting capital improvement projects on hold and dipping into the village’s general fund reserves, which stand at about $5 million.

Interim Village Administrator Roy Witherow said rather than making significant cuts in jobs and services, a bridge budget was the better option to address Lake Zurich’s long-term financial health.

“We wanted to create the least amount of disruption as possible, but the trustees will have some important decisions to make in the next few months,” Witherow said.

The biggest budget cuts for the village will delay many capital improvement projects, including those for an aging water system and other infrastructure issues, for at least another year. The village also eliminated the position of assistant to the village administrator, reducing the number of full-time employees to 171. Incoming Village Administrator Jason Slowinski, who officially starts with Lake Zurich May 7, will receive a $147,000 salary.

Officials said increased expenses for Lake Zurich have resulted from rising costs in liability and workman’s compensation insurance, as well as health care for employees. Per collective bargaining agreements, police, firefighters and most other public employees will receive 2 percent salary increases.

Lake Zurich officials do expect to see a marginal economic rebound, anticipating a 5 percent increase in sales tax revenue in the next fiscal year.

Interim Budget Director Douglas Ellsworth said the first quarter of this fiscal year would be devoted to finding ways to shore up the village’s general fund.

“It’s a structural problem. Eventually more spending cuts will need to be made, or new revenue sources will need to be found,” Ellsworth said.