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News
Oswego officials ask for options on budget : News : Oswego Ledger-Sentinel : Hometown Newspaper for Oswego and Montgomery, IllinoisOswego officials ask for options on budget
| Committee mulls ways to close water and general fund deficits
| by John Etheredge
| 3/4/2010
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"Options" was the key word last Wednesday evening as members of the Oswego Village Board's Finance Committee discussed ways to trim projected deficits in the village's two largest funds.
Committee members agreed to have village staff review a draft version of the village's proposed 2010-11 fiscal year budget and prepare a series of options intended to bring the general and water and sewer funds into balance.
Terry Michels, committee chairman, said he would like village staff to review the budget in an effort to see where further cuts could be made.
"I know that's a stretch, but last year on the initial budget we didn't think we could come up with something and we came up with $1.2 million (in cuts)," Michels said. "Unfortunately, that involved some layoffs with employees, services cuts and reductions in funding for some community sponsored events. But just as another option to look at, I think it's a starting point as well."
When questioned by Gary Adams, village administrator, Michels said he is interested in viewing options that do not include additional revenues that would result from fee or tax increases.
However, Michels added that village staff is welcome to present proposals "based on your own ideas of ways to make this thing work."
Board member Scott Volpe noted that the village's revenues are projected to be the same for the coming fiscal year as they were for the 2007-08 fiscal year.
"That's kind of a shocking realization for me, so I want to reiterate the fact that just like the school district, we need to work hard to live within our means and make sure we are not spending more money than we are taking in," Volpe said, adding, "Now is not the time to have the residents perceive that our local government isn't doing all we can do to help weather this storm until things get a little bit better."
The village's new fiscal year will begin May 1. The board is expected to adopt the new budget in April, prior to the end of the current fiscal year.
Early last month, Mark Horton, the village's finance director, notified the committee that expenditures from the village's general fund are estimated to exceed revenues by $1.5 million, according to the proposed budget, which would require the village to use reserve funds to balance the budget.
Horton also reported that the water and sewer fund is expected to end the current fiscal year with a deficit of $428,000. That deficit is projected to mushroom in the coming fiscal year, Horton noted, since total expenses from the fund are estimated to exceed revenues by $2.2 million.
In a memo to the committee, Horton said approximately $2 million is needed for the village to meet debt service (bond) payments in both the general and water and sewer funds.
"Both funds would be in a strong financial position if additional sources of revenue were available to pay the annual debt service," he noted.
Sales tax, water rate
hike listed among options
According to Horton, the simplest option for the village to make up for the shortfall in both funds would be to halt a long-standing practice of abating or lifting the property tax levies for the bond sales. If the village stopped abating the tax levies, it could then collect additional property taxes revenues to make the payments on the bonds.
However, abating the property tax levies would result in a property tax increase, Horton said.
In his memo, he noted that the owner of a home with a fair market value of $250,000 would have paid approximately $355 more in property taxes to the village if all of the tax levies had been imposed for calendar year 2009.
Other options to raise revenues for the general fund, according to Horton, would include implementation of a Home Rule sales tax of .50 to 1.0 percent, increasing the village's utility tax rate on electric bills from the current three percent rate to the maximum allowable of five percent, eliminate the utility tax on natural gas usage, imposing a gas use tax on all residents, reinstitute the village's vehicle sticker program, and imposing an amusement tax or a food and beverage tax.
"A combination of any of these would provide the necessary dollars to pay for debt service and or capital improvements for the village," Horton said.
In the water and sewer fund, Horton wrote in his memo that a solution for providing revenues needed to pay the operating expenses, debt service payments and funding for a capital improvement program need to be determined.
Among what Horton described as "viable alternatives" the village could consider to raise additional revenues for the fund would be to increase water rates, increase tap-on fees, impose a flat monthly availability fee on village utility bills or extend the tax levies to cover the bond sale expenses from the fund or a "combination of any of the above."
"I would propose additional revenues of $2.5 million to $2 million annually would instate the financial sustainability of this fund well into the future," Horton wrote in his memo.
Horton acknowledged that the village can continue to cut expenditures in the two funds to help control the deficits. But, he also told the committee, "I think we are going to be hard-pressed to come up with any substantial dollar amounts just by reducing expenditures, but we can always give it another try."
Since he began work with the village two months ago, Horton said he has learned that the economy has "taken a pretty good toll" on the finances and the reserves of the village. He also noted that he is aware of how difficult it was for the village to lay off some employees last fall as the board moved to trim expenses from the current fiscal year budget.
Referring to possible further layoffs, Horton said, "You're going to be hard-pressed to cut expenditures out of the budget without doing that again and going through that process."
Among the potential options for increasing revenues, board member Dave Schlaker voiced support for a sales tax hike.
Schlaker said he would favor a sales tax increase since shoppers who live outside the village would also pay it, thereby easing the tax burden on village residents.
Horton noted a sales tax increase would not apply to the sale of motor vehicles or large appliances.
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