Overruns may force Des Plaines to raise water, sewer rates

Des Plaines city officials say they may have to raise water and sewer rates next year to keep pace with growing expenses.

The city council was shown a worrisome snapshot of the city's finances this week, largely for the benefit of the new aldermen.

The cash balance in the city's water and sewer fund is projected to dip to 22 percent of operating expenses in 2009, down from nearly 40 percent in 2008. Projected fund revenues for 2009 are roughly $12 million, while expenses are expected to increase to more than $13 million.

"We need to scale back some of our expenditures in the water and sewer fund," City Finance Director Dorothy Wisniewski told the city council this week. "The water and sewer rate will need to increase in the 2010 budget in order to keep up with the expenses of that fund."

A recent financial audit shows the city's general fund balance, which was slightly more than 2 percent of operating expenditures in 2008 or equal to six days of operations, is projected to be roughly 9 percent of the city's $56 million budget for 2009.

Wisniewski said that's not enough. Despite the upward trend, it's still a far cry from what is considered a healthy fund balance of 25 percent, equal to three months of operating expenses, she said.

A healthy fund balance is needed to respond to unexpected revenue shortfalls and one-time expenses in emergencies such as flooding and snow storms. The balance also affects the city's bond rating and ability to take on more debt, 4th Ward Alderman Jean Higgason said.

A silver lining is that outstanding debt has declined from roughly $96 million in 2007 to $83 million in 2008 with the retiring of some bonds.

However, the city has fallen further behind in meeting a state mandate that police and fire pension funds be fully-funded by 2033. Right now, the two funds are $52 million short of that target, although the municipal employee retirement fund is in relatively good shape at 92 percent funding.

Officials said they are monitoring 2009 finances closely and cutting costs wherever possible.

"The fiscal strength of the city is the paramount concern," City Manager Jason Bajor said. "Every other project, proposal, wish or desire we have needs to be reconciled with the financial. It's not going to be changed in one year. We are going to look at a multiyear approach."