A lot can change from one year to the next. Let’s take Six Month Financial Reports for example:
DeKalb City Council Meeting Minutes
January 26, 2009
Mr. Espiritu presented the second quarterly report to Council. Changes that have been made to reduce expenditures include not filling sixteen positions and reorganizing the Community Development and Public Works Departments.
Mr. Espiritu discussed revenues including those from the gas tax and sales tax. He advised staff projects a $1 million surplus mainly due to the personnel vacancies. He added the third quarterly report will show sales taxes from November through January, and the City is in a better position financially than last year.
Acting Mayor Povlsen congratulated Mr. Espiritu and staff for the work done in this regard. Ald. Keller stated it is important to use caution at budget time in projecting revenues.
DeKalb City Council Meeting Minutes
January 25, 2010
Mr. Espiritu presented a one-page FY 2010 second quarter statement of revenues, expenditures and transfers to Council. He stated that staff did anticipate expenditures coming in under budget in this fiscal year. He added that currently personnel services are over 50% of the budget due to the contributions made to the Police and Fire Pension Funds. He pointed out that regular wages are at 51.9% because the first half of the year includes more work days, and payments from retirements and terminations incurred earlier in the year.
Mr. Espiritu indicated that salt and gasoline costs have gone down and are tracking below the same time last year. He added that expenditures will be below budget according to trends at approximately $66,861.
Mr. Espiritu stated that Council has been fiscally responsible and staff is also doing what it can to be fiscally responsible. He detailed that Council has worked out a five-year phase out plan for subsidized health insurance coverage for dependents of retirees and non bona fide retirees. Additionally, there have been workforce reductions. However, Mr. Espiritu added, there are things the City cannot control, specifically, revenues which are based on the economy.
Mr. Espiritu stated that property tax revenues are below budget figures, at 97%, which is approximately $130,000 below budget. Also, sales tax revenues are expected to be approximately $117,000 under budget and restaurant and bar taxes revenues are down 5% from last year, equating to $135,000 under budget. The utility tax is also below budget, at approximately $320,000 down.
As mentioned at the Committee of the Whole meeting, the State of Illinois is two months behind in income tax payments. However, even if the State was current in its payments, revenues are down 13.5% from last year, with projections of $827,000 shortfall in receipts. In total, Mr. Espiritu said staff is projecting $2 million shortfall in General Fund revenues. Mayor Povlsen stated that next year there will be some drastic changes to prepare the budget.
Ald. Baker said that property tax revenues will probably drop for the next two-three years. He added he doesn’t want to wait until next year’s budget to prepare for these deficits. Mr. Espiritu replied that three months ago, staff said there could be up to a $3 million revenue shortfall; he said he can comfortably say the City will be $2 million short.
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3 Comments
Steve, The new law you mention regarding different amounts for property tax installments is Senate Bill 2125 made law last August. It only applies to counties with population over 3 million (Cook). DeKalb County is not affected by this legislation from what I found.
There certainly will be increases due to other factors, such as the high school bond issue.
As Ivan Krpan has pointed out on the Chronicle blog, the decline in utility tax revenues is very worrisome. This time of year, there is normally a considerable usage of natural gas and electricity for space heating. If the revenues are down this much, it implies that many houses are not occupied and the heat is turned way down as a measure to avoid frozen pipes, or people may have stayed in their house and kept the heat down as a cost saving measure. Either way, this will likely impact the first installment for property taxes this year. Not only are the costs of the new high school on this upcoming bill, but as many people do not know, a new state law requires that 55% of the bill be paid on the first installment and 45 % on the second. There have been other local governments who have raised their levies for the property tax, too. The bills come out in late April, and are due in June. For those people who escrow their tax payments, this may well mean a substantial increase in monthly payments in May and June, and the increase starts to be made up in those two months. I have a nagging suspicion, that property tax receipts are going to be down substantially this year, and that is going to really throw a wrench into the cash flow situation of the local governments heavily dependent on this money.
From my experience in the 1981 recessions, these downturns hit very fast but this time, the problems are world wide, and I doubt that this will be over for some years, not months. Things are looking increasingly ugly.
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Kerry, thanks for the heads up on this. I did not know that the law was limited to the more densely populated counties. Still, even out here I think the increased property tax levies will bring reduced revenues due to the economic situation. This might dampen the drum beating for further tax increases to maintain unrealistic spending levels for many governments.