The Oak Park village board of trustees began discussions of the recommended budget for fiscal year 2021 in earnest Oct. 26, as department heads walked board members through their substantially sliced and diced finances. Due to the economic toll of COVID-19, the total cuts to the budget as recommended by staff are approximately $22 million.
“The extended duration of the pandemic is not something that I think anybody has experienced while working in recent times in local government,” said Village Manager Cara Pavlicek.
While compiling the recommended budget, Pavlicek said staff did their best to determine what the village’s ongoing response to the COVID-19 pandemic would look like and tried to plan accordingly.
“The fiscal stability of the village is dependent upon both sources of revenue coming in and expenditures deemed essential going out,” said Pavlicek. “It has become something that we cannot predict with great certainty, the duration of the pandemic and what public resources are needed in that response.”
Pavlicek assured the board that staff took into account the direction to increase the tax levy by no more than three percent. Staff was able to keep the increase to three percent despite, the $1.3 million dollar increase to the police and fire safety pension funds.
The budget is based on fund accounting under state laws, according to Pavlicek. The village of Oak Park has 35 funds, categorized into different classifications. Special revenue funds include money from federal resources, including community block development grants (CBDG), while fiduciary funds handle the village’s pension obligations. Capital funds support the fleet of emergency response vehicles and construction of capital improvement funds.
The village’s general fund finances its day-to-day operational budget, while the internal service funds track expenditures and revenues supported and related to but separate the general fund. The village’s enterprise funds derive revenues from fee-based services, such as water, parking and refuse collection. The general fund and enterprise funds make up the majority of the village’s expenditures.
In the recommended 2021 budget, the general fund projected expenditures total $61.1 million, a 3.4 decrease from last year’s projected expenditures. Police and fire spending make up the majority of those expenditures, largely due to pensions.
The village is estimating under $59 million in total revenue for fiscal year 2021 and $61 million in expenditures, resulting in an expected deficit of $2.1 million in the general fund.
Some of the deficits were created intentionally, as in the water fund where the village purposely accumulated reserves to spend that money on infrastructure projects, according to Oak Park Chief Financial Officer Steve Drazner. The water fund has a negative budget deficit of about $5.4 million for next year.
“There is more than adequate cash to pay for that deficit,” said Drazner, in the general fund’s fund balance.
The village has a policy that the general fund maintains an unreserved fund balance of no more than 10 percent and no less than 20 percent of the current year’s estimated operational expenses.
Trustee Dan Moroney felt it was a good strategy to draw on the accumulated general fund balance to keep the tax levy to an increase of 3 percent, giving residents some predictability when it comes to their tax bills.
The main capital improvement fund has a deficit of $3.6 million dollars.
“The reason for that is we’ve already issued bonds of about $11 million dollars this year; not all of it’s going to be spent on the Lake Street [reconstruction] project,” said Drazner. “Some of that will carry forward into next year, which will cover that deficit.
The total expenditures across funds are expected to be around $146 million, a reduction from this year’s budgeted expenses of $168 million.
Sales taxes are another important stream of revenue for the village. However, the revenue from sales taxes greatly decreased as the majority of that revenue is collected from bars and restaurants – both industries have suffered major financial losses from COVID-19.
With the state-mandated cessation of indoor restaurant and bar service in suburban Cook County beginning Oct. 28, those struggles will continue, as will the decreased revenue from sales tax collected from bars and restaurants.
Mayor Anan Abu-Taleb, who is also a restaurant owner, expressed a desire for further financial relief from the federal government across the board.
“With this new regulation, as a small businessowner I still have to make it work,” said Abu-Taleb. “Families, municipalities, small businesses in general – we’re all having a tough time and I do wish the federal government would get its act together and help us get through this god**** thing.”