A projected $250,000 hole will likely need to be plugged in the 2013 budget, said Village Administrator Mark Janiuk.
With property values plummetting by as much as 14 percent, no matter how the Village plugs that hole—through layoffs, levy increases, or reductions in the payments it makes to the utilities—a property tax rate increase is inevitable.
Janiuk explained the 2013 budget assumptions to the Village Finance Committee at its Monday meeting.
No formal budget has been presented; this is only the first breath of a future 2013 budget. Janiuk highlighted several problems that are contributing to the $250,000 structural deficit.
“The Village used $103,000 from the fund balance in last years budget, but you can’t keep dipping into the fund balance to balance the budget,” he said.
Janiuk said the Village would likely need to consider cutting staff, reducing the amount of money it pays to utilities, or increase the tax levy.
“It’s too early to make a decision on that, but a $250,000 deficit isn’t going to be fixed by cutting out office supplies,” he said.
Even if the Village chooses not to increase the tax levy, the property tax rate is going to increase because of the anticipated decrease in property assessments.
“It’s my understanding that we need to come into compliance with the state guidelines,” said Lee Wishau, Finance Committee and Village Board member. “There’s an inequity between our assessments and the fair market values, especially for medium to high (priced) properties.”
If the Village Board did want to increase the tax levy to fill the $250,000 gap, they would need to raise the property tax rate by 10 cents per $1,000 assessed value, Janiuk said. “But it’s going to go up no matter what because the assessed value is going to go down.”
Village President and Finance Committee member Ron Coutts asked Janiuk what message they needed to send to department heads.
“Should we plan for zero growth?” he asked.
“That’s basically the message we’re putting out, yes,” Janiuk said.
Still, there was one option that Janiuk said may allow the Village to plug the hole, and possibly add staff to the police and fire departments – enacting a user fee for storm sewers.
In June, Village staff presented the concept and they voted to study the issue.
Currently the funds storm sewer projects through a tax levy, but they are considering a user fee that all property owners pay to fund capital, maintenance, operational and compliance-based projects.
This allows the Village to free up money in its tax levy.
“If you do a user fee, it frees up $750,000,” Janiuk said. “It could provide money for firefighters or more officers, but overall you have to look at where you want to go.”
Budget challenges include:
- Insurance and retirement costs are expected to increase by 5 and 2 percent respectively, but the village expects to see an increase in the amount collected from building permits.
- High overtime costs in the Police and Fire departments could increase the structural deficit. As of Aug. 1, the police department has used about 80 percent of its overtime budget and the fire department has used 73 percent of its overtime budget, according to department heads.
- Unsettled police and fire union contracts are the biggest unknown. The in April and the firefighter contracts haven’t been settled either. The Village Board was expected to discuss the police contract in closed session following the Finance Committee meeting.