Following a special board meeting Monday night to approve the expenditure of funds from an estimated $6 million tax increment financing pot for a variety of projects, the River Forest village board turned its attention to the far more daunting task of addressing a village budget racked by relentlessly bad economic news.
Just months after the previous village board closed a $1.4 million hole in the 2009-2010 budget, the new board is facing a nearly $600,000 hole in its budget, despite staff layoffs, wage and hiring freezes and across the board cost cuts.
At Monday night’s committee of the whole meeting, village board finance committee chair Jim Winikates told the board that projected revenues for the fiscal year will fall $607,083 short of the budget passed in April by the previous board. Expenditures are $36,000 higher than expected.
“We have a revenue problem,” Winikates told his board colleagues with notable understatement. “We have some control over expenses. We don’t have as much over revenues.”
The largest hole on the revenue side is a $267,420 shortfall on building permit fees, followed by a $151,227 deficit in the village’s share of the state income tax and a $136,963 shortfall in property tax receipts. The permit fees, which were raised significantly in April, are down 52 percent. Winikates said the overall volume of permits is down 60 percent over last year, and down 30 percent since April 30, despite the fee increases.
One bright spot is a new restaurant tax, which is projected to collect $31,000 more than expected, despite the fact that the Harlem Avenue McDonald’s is currently closed for rebuilding and generating no sales tax revenue.
There have been spikes in several line items on the expense side, as well, including a $34,000 rise in expected unemployment benefit payments. Winikates also noted both the fire and police department are seeing spikes in several line items, due to personnel developments. The departure of a firefighter who left in July for the Chicago fire department is expected to cost $46,395 in overtime to cover his shifts until a replacement is hired and trained. That is in addition to a $76,743 increase in regular salary payments.
The police department is also seeing a similar hike in overtime payments to cover the loss of two patrol officers to layoffs, a patrolman on extended medical leave and a sergeant on medical leave.
Winikates said he and Village Administrator Steve Gutierrez will work on a proposal to address the budget holes and have a report for the board at its scheduled September committee of the whole meeting.
“We’re going to have some issues to deal with in the future,” said Winikates. Continuing a discussion started soon after the new board was seated in May, Winikates mentioned the likelihood of increased sales taxes.
“One thing we’ve kicked around is a sales tax referendum,” he said.
A generally agreed upon figure is that an additional one-half percent sales tax would bring in about $800,000. But while the village can raise its sales tax, as a non-home rule community that additional revenue can only be used to abate property taxes or to fund capital projects, not for general budget line items. The revenue neutral use of additional sales taxes to lower property taxes makes no budget sense, several trustees interjected, and Winikates agreed.
“We want to look to see if there’s enough capitalizable expenditures to make it worth our while,” he said of the possible sales tax hike.
Winikates said he intended to take a longer view of the village’s financial health as soon as the board stabilized the current situation.
“Hopefully at the September committee of the whole meeting we will be talking more about the three year projection.”