Layoffs likely in Vernon Hills

A confluence of revenue drops totaling more than $1 million could force Vernon Hills' hand with possible layoffs in the future.

Short-term spending cuts could address immediate concerns, but revised projections for major funding sources, such as sales tax, do not bode well for the next year or longer, staff informed the village board Tuesday.

"As we sit here, we're spending more money than we're taking in," Village Manager Mike Allison said.

As it nears the halfway point for the current budget year, the village is forced to scramble as sales, income, electric utility, telecommunications and hotel/motel taxes that fund day-to-day operations are about $1.1 million below expectations.

"We're going to be looking at letting people go in all likelihood," Mayor Roger Byrne said.

Salaries account for about 80 percent of operating expenses. The village for years has not been filling positions that open when people retire, and has dropped to 108 full-time employees from 128 in 2002.

It also has instituted a cross training program in which employees learn other jobs. For example, an administrative assistant at village hall currently is working with the police dispatch center.

Communities throughout Lake County are facing similar issues in light of falling revenues. Municipal jobs have been cut in Hawthorn Woods, Mundelein and Waukegan, for example, and general cost-cutting in all towns has become common.

However, Vernon Hills is a shopping center-heavy village that is perennially at or near the top for sales taxes collected and has no municipal property tax. Instituting one has not surfaced publicly as a possible answer and with its standard revenue sources dropping, the village is running out of options to cut costs.

Byrne solicited information from staff that showed a typical police officer's salary and benefits, for example, amount to about $110,000 per year. The board did not authorize any reductions but directed Allison to assemble employee cost figures to consider later.

Trustee Cindy Hebda said many employees have been with the village for years.

"They truly are family but we've got some tough decisions to make, absolutely," she said. She asked staff to determine the impact of furlough days.

Allison and Finance Director Larry Nakrin cautioned this wasn't a typical recession where things bounce back to normal within a year or so. Sales tax estimates for the Christmas season are not rosy.

"The question is how quickly we recover and how fully we recover," Nakrin told the board. "That influences how much we use the fund balance."

Because sales tax is volatile, the village has continued to keep large balances in reserve. Whether or how much to tap those is to be determined. Decimating an already thinned work force is another consideration.

"As they say, it's a rainy-day fund. Well, it's pouring outside," Allison said.