By Anna Lothson
The village board is months away from passing the 2013 budget, but the season of financial planning is officially underway.
Overall, the village's finances are on the mend after a tough few years, but pension obligations and debt payments could continue to be daunting for Oak Park, according to discussions at Monday's special board meeting.
The budget is typically passed in November since Oak Park runs on a traditional Jan. 1-Dec. 31 fiscal year, but discussion about how to approach next year's budget took place at Monday's special board meeting.
Interim Village Manager Cara Pavlicek led the board through a detailed presentation of what the village hopes to accomplish before setting the final budget numbers, which includes guidance for the finance committee before its Aug. 20 meeting. Reflecting on past budgets is a big part of how management will move forward.
"What we are really paying attention to this year, from a manager's perspective, is times when revenues have exceeded expenditures," Pavlicek said. The downward trend since 2007 is reversing, though, and the village thinks that change may stick. "I think we're cautiously optimistic that we're beginning to see growth in revenue — maybe back to growth seen in prior historical levels."
The largest impact on the village's budget, similar to recent years, is the rising cost of pensions and its burden on the tax levy. The village makes up about 13 percent of the tax bill, and from that the costs go toward debt services payments, police and fire pension and general funds. Roughly 45 percent is attributed to pensions and debt.
Trustee Adam Salzman said it's important how the village characterizes its debt so people understand how the village's budget is broken down. Trustee Colette Lueck expressed similar concerns.
"If I was sitting at home looking at this slide and I realized that 45 percent of my tax bill doesn't go toward providing any actual current services, it's all going to debt from pensions — which we're obligated to fund … that's a significant portion of my bill that's not buying me anything current at all," she said.
Village President David Pope explained much of the debt service portion of the budget funds streets and parking, but it's sometimes difficult for taxpayers to understand where money is going.
"If you just looked at this [document], you wouldn't understand what's been talked about at this table," Lueck said.
Trustee Ray Johnson said it's important to educate the public that the pension obligations are a large part of what's impacting the village's general fund, which is the primary operating fund.
"What you heard so often is 'my taxes are so high and I don't believe I'm getting the services I used to get,'" Johnson said. "This pressure is going to continue to build and we have to be able to articulate where we are, and if we have to continue to find revenue sources, why we're seeking those revenue sources."
Johnson expressed optimism and uncertainty about the upcoming budget, saying it's on the right track but needs more future planning.
"Long term, we are going to need more time to dig ourselves out of this collective global economic crisis," he said. "What you're laying out here is a very conservative, programmatic approach that makes sense. It just may need a little more detail to understand what the impact is."
Pavlicek said they are working to hit Oak Park's recently adopted policy that aims at a fund balance of at least 10 percent, but no more than 20 percent. This figure is not currently met.
Throughout the two-hour special meeting, pension obligations still dominated conversation, and Lueck suggested if the trend of the state legislature pushing financial burdens on local governments continues, municipalities like Oak Park may go bankrupt.
"I just think this is a tremendous concern form us," she said. "When you think of this increase, and you think of the number of people who live in Oak Park who have to absorb the costs and you do the math out five or 10 years, it becomes untenable. There's no way a community this size can do it."
Lueck said that, moving forward, she'd like to see more side-by-side comparisons with past budgets so the village can assess the 2013 budget properly.
Budget discussions will come back to the board throughout September and October before being formally adopted in November.