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News
Sales tax revenues give Oswego budget a boost : News : Oswego Ledger-Sentinel : Hometown Newspaper for Oswego and Montgomery, IllinoisSales tax revenues give Oswego budget a boost
| More shoppers turning to village's lower priced stores, official suggests
| by John Etheredge
| 10/30/2008
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The Oswego Village Board received some positive news about the village's economic condition this past week.
In a memo presented to the board Oct. 21, Mark Pries, the village's finance director, reported the village's sales tax revenues "continue to be strong" and described the village's general fund as remaining in a "healthy position."
Pries, however, said he and his finance department staff will continue to monitor the general fund and in the event of any changes "will bring these changes to the board's attention along with recommendations with possible remedies."
The board's finance committee reviewed the memo the evening prior to the board's Oct. 21 meeting.
Pries wrote, "The village has experienced its strongest sales tax receipts the last 12 months and the receipts are holding steady. "
He added, "(Village) staff believe the reason why Oswego's sales tax receipts have remained constant in the face of the recession is due to the fact that the commercial base in Oswego is made up of non-luxury stores for the most part. Target, Kohl's, Wal-Mart and Meijer are not considered 'high-end' stores, but rather the stores people turn to when times are tight."
Sales tax revenues are a key source of income for the village's general fund.
In the memo, Pries acknowledged the village is feeling the effects of the downturn in new home starts-but not as severely as some observers might expect.
The village's current 2008-09 fiscal year budget covers the period between this past May 1 and next April 30.
Pries noted the budget anticipated 348 new housing units would be built in the village during the fiscal year.
"Through Sept. 30, 123 (housing) units had been applied for along with permits being paid. 123 units represent 35.3 percent of the budget..." Pries wrote.
In addition, he noted that as of Sept. 30, the village had received $183,803 in developer-paid transition fees or 36 percent of the budgeted amount of $507,375.
Pries indicated he believes that the village's transition fee revenues will come in under budget, "the extent to which is very difficult to determine," while "permit fee revenues appear to be tracking on pace to meet (the) budget, but whether that will continue cannot be forecast.
He emphasized that permit fees and transition fee payments are not based solely upon number of units, but also upon market value and size of each housing unit.
"When the budget was created, the size used was 2,800 (square feet) and the market value was minimal (less than $300,000) for every unit sold. Therefore, since minimal base factors were used to determine these fees, its stands to reason that even though the 348 unit level may not be reached, the revenue shortfall may not be as drastic as one may fear," he wrote.
Also in his memo, Pries said the village stands to realize some significant savings in the general fund during the current fiscal year due to several staff position being left vacant.
He wrote, "The savings generated by these vacant positions conservatively total $198,920 and this amount includes not only salary but health insurance, FICA, Medicare and other retirement costs. These savings will not, most likely, make up completely for any shortfalls in building related revenues. However...the general fund continues to operate in a healthy manner. There are large revenues (i.e. sales taxes, income taxes, telecommunication taxes, utility taxes) that lag one to two months behind which creates an image that the general fund is in a deficit operating position when the fund is actually operating as expected and as planned."
Pries added, "If the (general) fund was operating on a cash (accounting) basis, rather than an accrual basis, it would be in a surplus position."
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