How the Illinois budget crisis is affecting suburban casino towns

How do you tackle planning a city budget without millions owed in casino money?

With a lot of uncertainty.

The state's budget impasse is affecting municipalities across Illinois, which have been dipping into reserves in the absence of motor fuel taxes and emergency telephone system funds since July 1.

But casino towns such as Elgin, Aurora and Des Plaines are feeling an even greater sting without their share of gambling tax revenues, which fund expenses like road projects, economic development and social services.

The three cities are in the midst of budgeting for 2016 with fiscal years starting Jan. 1 - all but an easy task that requires prioritizing projects, shifting expenses and possibly further spending down reserves.

"At some point we thought maybe governance, common sense and stewardship of the state of Illinois would have taken over by now," Elgin City Manager Sean Stegall said. "Apparently not."

Delaying roadwork

Elgin's share of Grand Victoria Casino revenues is estimated at about $10.1 million this year, of which the state has withheld $2.5 million since July. That will swell to $5 million by year's end if nothing changes, Chief Financial Officer Debra Nawrocki said.

Neighborhood street resurfacing and rehabilitation projects, tentatively projected at $4 million in 2016, will suffer the greatest impact in the absence of casino money. There will be no such projects budgeted in the first quarter, and possibly all year, Stegall said.

With more questions than answers, Elgin canceled a special budget meeting this month, and staff members will present a proposed 2016 budget to the city council Nov. 4. "In comparison to every other budget that I have proposed or have been a part of in the city of Elgin, this will be vastly different due to the uncertainty," Stegall said.

The city will make any debt payments planned within the riverboat fund, Stegall said. But the city council will have to make difficult decisions regarding funding social services and neighborhood grants, a contract with the Elgin Development Group, the Ride in Kane transportation program and more.

Funding can move forward if the money comes in, but timing - such as for road projects - will be of the essence, Stegall said.

What's critical

The delay in the disbursement of Rivers Casino money might mean reducing expenses to the tune of $8 million in capital projects next year in Des Plaines, including stormwater, street reconstruction and more, Director of Finance Dorothy Wisniewski said. The city council has had two budget meetings but no final decisions have been made, she said.

Local casino revenues are projected at more than $24 million this year, but Des Plaines has an agreement to pay the first $10 million to the state and 40 percent to 10 South suburban communities including Harvey, Markham and Chicago Heights, Wisniewski said.

The city has received $12.4 million through July, which means its current portion stands at $1.4 million out of more than $8 million projected for 2015, she said.

The city budgets casino money for expenses a year later, so the city is considering delaying some projects in 2016 to ensure there is money to fund critical projects in 2017. Things that can't be delayed include building infrastructure to buy water from the Northwest Water Commission, Wisniewski said.

"It's very difficult for the city. We do count on gaming funds to fund capital infrastructure projects, but the city may need to delay those projects, or fund them with other sources, or we may end up bonding out," she said, adding the city council usually opts out of borrowing money.

Cutting costs

Aurora uses its share of Hollywood Casino money to fund economic development initiatives such as "Invest Aurora" and pay for more than $1.7 million yearly in education, social services, and cultural grants and programs, Aurora Chief Management Officer Carie Anne Ergo said. The money also has helped lower property taxes, she said.

Casino revenues were estimated at about $7.5 million this year, but the state has withheld about $1.7 million, which will turn into $3.5 million by the end of the year, Ergo said.

The proposed 2016 budget, to be introduced to the finance committee Tuesday, will include programs to be funded by casino money but moving forward will hinge on whether the funds are there Jan. 1, Ergo said.

"We're in the process now of finalizing our budget, and it's been extremely difficult," she said. "The reality is, we're looking into next year and we wouldn't be able to be in a position to expend those funds if the state is not continuing to pay for them."

In that case, the city would look at cost-saving measures such as negotiating lower contract payments, although economic development likely would remain a priority in order to boost tax revenues, Ergo said.

"If next year the cities (like Aurora and Elgin) aren't able to fund the homeless shelter and the programs for at-risk youth," she said, "it will be very difficult on the community."