An almost flat growth-rate in municipal revenues threatens to push the village of River Forest into a dangerous financial position in the next several years, according to Trustee James Winikates. And in the meantime, pension and health insurance costs for union employees continue to overwhelm village coffers.
“We would actually run out of money in the general fund, for certain, in 2013,” Winikates said Monday during a village board meeting.
A serious threat to sustaining municipal services at their present levels is that village revenues are growing at a rate of less than 1 percent annually. Meanwhile, police pensions costs have increased by 67 percent over the last five years. Over the same five years, the amount allocated to firefighters’ pensions has grown 110 percent.
“Without a radical shift in our limited ability to raise new revenue, this growth in pensions will continue to cripple our efforts in righting our financial ship for the long haul,” Village Administrator Steve Gutierrez said in a March 5 budget memo.
The new fiscal year for River Forest begins on May 1, and trustees expect to adopt a budget in April. A draft of the spending plan shows a year-end budget surplus of about $76,000, and even that slim margin is threatened by several factors, said Winikates. The proposed budget for fiscal year 2010-2011 assumes that union employees in the police, fire and public works departments will not receive any pay increases. All three of those contracts expire April 30, and whether a salary freeze becomes reality will be determined in negotiations.
A citizen finance committee led by Winikates made several budget recommendations to trustees in January. A formal report from that group is expected to be presented to the board April 12, which is also the earliest that trustees could vote to adopt a budget.
“Clearly, our problem is in revenue,” Trustee Catherine Adduci said. “We have less than 1 percent growth.”
If the village is unable to find additional money in the coming years, the deficit in 2012 would exceed $800,000. In 2013, that figure could jump to $945,000 and the village’s reserves would be half what they are today, according to Winikates’ projections.
River Forest’s reserve fund is expected to have a balance of about $3.11 million on April 30. That is enough money to cover about 96 days of village operations.
Exacerbating the budget woes in the short-term is the looming expiration of a special taxing district designed to spur development along Lake Street. Some administrative and operating expenses that would otherwise be paid from the general fund – about $324,000 worth – have been paid through this separate account. But that pool of money disappears Dec. 31, meaning that four months’ worth of expenses will be shifted to the general fund.
Exactly how the village might boost revenue streams – and whether more spending cuts should be made – is a source of contention on the board. Trustees Steve Hoke and Steve Dudek both lobbied Monday night for deeper cuts. The two also expressed frustration that recommendations in that vein haven’t been handed directly to the board from the village’s department heads. Both Hoke and Dudek said that none of the elected officials have the expertise that village employees have in evaluating such measures.
On several occasions, Hoke said the budget is in a crisis of “nuclear” proportions.
Most likely, the budget that is adopted next month will include a number of fee hikes for parking permits, vehicle licenses and property inspections.