Gurnee cuts spending, braces for sales tax shortfall

Despite having built a considerable emergency fund since the 2008 recession, Gurnee village leaders have made hard cuts to spending during the COVID19 pandemic lockdown, including delaying work, canceling planned salary increases for employees and freezing hiring.

Mayor Kristina Kovarik said the cuts have totaled almost $2 million, but she acknowledged those moves alone won't be enough to make up the difference in lost revenue.

Kovarik said village employees agreed to freeze the payment of an annual cost-of-living adjustment that usually goes into effect in May. As a symbolic gesture, the board took a 50% cut in pay as well, she said.

The mayor's annual salary is $12,000, and each village board member receives $3,600 annually.

As a village that does not levy a property tax, Gurnee is more vulnerable to the ups and downs of the local economy than the average suburb. Just under half the village's general fund revenue comes from sales taxes.

Kovarik said the 2008 recession hit Gurnee hard and it took the village almost three years to recover. Since then, village leaders have squirreled away money each year, and now the village has a $26.5 million emergency fund.

The fund is large enough that in theory the village could run as normal for around six months without a single dollar coming in, said Jack Linehan, assistant to the village manager.

Kovarik said she's glad the village has been frugal and has planned for the worst.

"We have strong reserves because we've always had the mentality that, while we never predicted a pandemic, but that if something catastrophic happened, or something happened to the big three, we had something to fall back on," she said, referring to Great America, Gurnee Mills mall and Great Wolf Lodge.

Great America has not yet opened, Gurnee Mills mall is closed but is handling curbside pickup orders, and the only guests allowed at the Great Wolf Lodge have been Navy recruits as part of a quarantine program before they head to nearby Naval Station Great Lakes.

Linehan said there is around a three- to four-month gap between when sales taxes are collected by the state and when the funds are given to the village, so it will be several weeks until it is clear just how significant the hit from the pandemic will be.

"If they remain closed, it will be a pretty significant effect on village financials," he said of the "big three." "They have a halo affect also; they bring in business to the entire corridor."

Kovarik said the village is working with businesses to make sure they reopen with safety guidelines in place when the state moves to Phase 3 as early as Friday. But she said she is concerned when she sees people flaunting safety rules.

"If people stop wearing masks and stop social distancing, it increases our risk of going through this all over again," she said. "No matter what the government does, it is going to be about people taking responsibility for each other's health."