McHenry approves $52.7 million 2021-22 budget, with 'extremely conservative' revenue estimates
The McHenry City Council last week unanimously approved a $52.7 million budget, with a more than $520,000 reduction in expected general fund revenues from last year's municipal budget, illustrating officials' continued uncertainty of how the local economy will respond to the ongoing COVID-19 pandemic.
City leaders stayed cautious with their spending proposal, even as McHenry's shortfalls amid the public health crisis were less than half the drastic initial estimates of a 10% to 20% gap between projected and actual city revenue for the 2020-21 budget.
Rather, the city saw revenues for the general fund -- which pays for city services like its police department, community development programs and public works administration -- come in 4.7% less than the amount budgeted last year. The city's budget runs from May 1 through April 30 of the following year.
"The fiscal year 2021-22 budget, as proposed, includes extremely conservative revenue projections as we continue to monitor the pandemic and its impact on municipal revenues," City Administrator Derik Morefield and Finance Director Carolyn Lynch said in a memo to the council.
With about $1.1 million in federal grants received from congressional measures taken to combat the pandemic's economic fallout, the city came in around $43,000 short of projected revenues for the fiscal year that ended Friday, Morefield told the council.
During the three-month period from March through May last year when restrictions on gathering were first ordered by Gov. JB Pritzker, the city was about 14% behind its projected revenues, but when restaurants reopened and other business activity was allowed to resume, that helped restore local tax collection, officials said.
The city also deferred about $2 million in expenses between both operating and capital costs last year, and the budget expenditures for the upcoming budget year include an 8.8% reduction in personnel costs. That was achieved through savings from employee retirements and attrition, reorganization by the city and the decision to bond outstanding police pension liability, Morefield and Lynch said in the memo.
"We don't want to assume all of our revenues are going back to normal because we're not back to normal yet," Morefield said.
Included in the budget are utility rate increases of 8% for water use and 5% for sewer use. The rates will respectively move to $3.82 from $3.54 per 1,000 gallons for water supply, and to $4.20 from $4.00 per 1,000 gallons of wastewater.
"This is the same rate increase that was recommended for the fiscal year 2020-21 budget that was not implemented," city officials wrote to the council in the budget proposal.