Mt. Prospect financial report not encouraging

Mount Prospect officials don't see today's recession ending anytime soon.

David Erb, the village's finance director, gave a midyear budget report to the Mount Prospect village board on Tuesday. While the numbers for 2009 look grim, 2010 projections aren't much better.

Because of low revenues, Erb expects a general fund deficit of $1.5 million. In 2010 he expects a $2 million deficit unless more reductions are made during the budget process this fall.

Erb blamed the deficits on shortfalls in investment income, income taxes, real estate transfer and utility taxes.

To make up the difference, Mount Prospect department heads have already cut $491,000, and will be asked to cut an additional $458,000, Erb said.

Thanks to a healthy reserve fund, Mount Prospect hasn't had to lay off employees unlike many nearby municipalities.

However, that reserve fund is shrinking. According to Erb's figures, Mount Prospect's 2007 reserve fund totaled $12.8 million, which was about 32 percent of the total general fund budget. In 2009, the reserve fund was $11.5 million, about 26 percent of the general fund.

In 2010, Erb said, the "worst-case scenario" is a reserve fund with $7.5 million, only about 16.7 percent of the general fund.

Trustee Paul Hoefert said the village should try to keep a reserve account that is around 25 percent of the general fund.

"We've been through tough times before," Hoefert said. "But we need to keep that 25 percent target. If we don't it could drive our bond rating in the wrong direction. We have to be careful. We could be in this pickle for a number of years."

In addition, next year's tax levy increase could be as much as 9.31 percent, mostly because the village would need to raise an additional $1 million for fire and police pension commitments, according to Erb.

"This year we saw significant losses in police and fire pensions and we need to make for those losses," he said.

Mayor Irvana Wilks asked if the recent reopening of Mount Prospect's Wal-Mart will help 2010 sales tax figures.

"It's been open since Wednesday and is drawing record crowds," she said. "You couldn't find a parking space there this weekend."

Erb said it's hard to predict Wal-Mart's future sales and added that "it won't bring us back all the way."

The village board will start 2010 budget hearings in October and approve next year's budget in December.