St. Charles to address coronavirus's financial impact in phases

Facing a financial shortfall due to the coronavirus crisis, St. Charles officials are preparing to make their first round of budget reductions - and it likely won't be their last.

Aldermen this week expressed early support for eliminating about $2.4 million in projects and purchases from this year's budget, resulting in a 5% drop in general fund expenses.

A majority of those initial cuts affect "behind-the-scenes" operations and won't be obvious to the general public, Finance Director Chris Minick said. But he warned that more noticeable changes could come as the city's financial picture becomes clearer.

"Our future adjustments will almost assuredly have an impact on service levels and/or they will increase the costs to residents," he said. "When I look at the budget, I just don't see any way around that."

The global health crisis and subsequent stay-at-home order will have a "deep impact" on the city's bottom line, Minick said, with the most recent projections showing an anticipated revenue loss of 10% to 15%.

Nearly half of St. Charles' general fund revenues are generated through sales, alcohol, hotel/motel and other user taxes. Those are the economic sectors being hit hardest by the pandemic, Minick said.

Income tax revenue also could be affected as the national unemployment rate skyrockets, he said, and the city could see some delays in the distribution of property taxes.

Given the uncertainty surrounding how long social distancing restrictions will last, and to what extent, it's difficult to predict how drastically the city's budget will be affected, Minick said. The city plans to offset the revenue dip in phases and adjust its response as more data becomes available.

"We want to have an approach that respects where we are and respects the realities of the situation," Minick said. "But by the same token, we want it to be measured and reasonable. We don't want it to be an overreaction based on some assumptions that we have today that may not bear out."

The first round of budget cuts, expected to be ratified by the city council next month, include deferring vehicle replacements, pushing back public works facility upgrades, leaving vacant staff positions open and suspending the city's spring cleanup program until next year.

Staff members also proposed nixing a salary classification study and reducing funding for the facade, business incentive and corridor improvement grant programs.