Tuesday was the Long Range Financial Planning meeting (see Required reading for background, as well as category budget for DGreports extensive posts on past budgets). Barnett and Beckman were unable to attend. All the curve balls and budget sucker punches thrown by the state we’ve already discussed. There was a general agreement among council members that the existing plan would be supported: contain expenses, maintain reserves, capture what we can from sales tax, and raise property taxes again this time by about $40 for a $300K home. Staff may take a harder look at a restaurant food & beverage tax.
After the break, some other ideas that might help the village budget:
Pay for the Ogden TIF preamble agreement with District 58 using Ogden TIF funds and report them in the annual TIF report. All taxing bodies had their chance to enter an agreement; it’s a requirement of TIF creation that other taxing bodies be notified of the intent, and they would have negotiated to enter into an agreement before the district formed just like 58. In 2009 the annual required payment of $131,000 for the TIF district generated revenue-sharing was paid for out of the Real Estate Fund (226) a non-TIF fund. The dollars will go up every year. It’s long past time this annually repeating expense came off the General Fund ledger and goes into the TIF ledger where it properly belongs. Amend or rider the agreement so that the payments come from the TIF district funds rather than general funds.
This could be a repeating annual savings starting at about $135,000 for FY2011 if the village does this.
The village has been paying this since 2001. Those funds should be paid back; from the TIF increment back into the general fund. Those ten years of payments total about $400,000 as a one-time revenue source.
Bill the CBD TIF for every penny spent from the General Fund. Some monies have been returned; there may still be General Obligation debt payments paid via Real Estate taxes that have not been properly restored to the general fund. This includes re-combing the records for originating bond fees, early stage P&I payments that were budgeted from RE taxes, and employee expenses that were billed to the village that should have been billed to the TIF District. Examples of employee expenses might include village time spent on the AOTG agreement, time spent by public works employees working inside the TIF district, and any other employee expenses directly related to CBD or Ogden Ave TIF District functions.
The village probably did not bill every hour into the TIF District budget, but it should have, to accurately account for the true cost of the district. Council and staff set the precedent last year of billing hours to specific purposes. The village might consider exploring budgeting and billing the TIF Districts for hours spent on the TIF’s. This is tying costs to the source, and accounting accurately the cost of the TIF Districts.
Also in 2009 there was a one-time transfer of $200,000 from the Real Estate Fund (226). That $200,000 can be restored to the General Fund at some point in time.
Will this force an extension of the CBD TIF District? The current debt structure already guaranteed years ago that the CBD TIF would need to be extended when it expires. There may be prohibitions against this; the Illinois TIF Statutes make clear only that all expenses have to be accounted for, it does not provide categories of acceptable or unacceptable expenses, nor does it appear to prohibit correcting past accounting oversights. It also provides that any surplus be redistributed to the various taxing bodies (65 ILCS 5/11-74.4-7).
Combine reserve funds. The Parking Fund currently projects a cash balance of $500,000. The Real Estate Fund has a cash balance of around $250,000. There’s more fiunds and more cash reserves. The village now knows exactly what a “rainy day” looks like. Run the numbers for separate reserve funds, create a new General Reserve Fund in the budget, roll them in at an appropriate level. No policy change about using reserves, just combine them into one reserve fund.
There might be $200,000-250,000 freed up one time by doing this.
Continuation of the Municipal Buildings Fund as a pay forward construction fund for a new civic center. A new civic center will not happen unless budgeting is as tight as a drumhead. One way is to forward-fund a percentage of the project to offset interest costs on the debt balance borrowed. Every dollar saved up front directly reduces TIC by 40 cents on the dollar.
Painful? Yes.
The village will have to make do with existing facilities for several years? Yes.
Use the opportunity to show the shared pain with taxpayers. Everyone gives in hard times. The conventional wisdom is spread the cost over the life of the project by borrowing. Fire Station #2 showed there were significant savings to be had by saving money up front, and also by already owning the land, both of which eliminated substantial interest payments. A new civic center needs costs blunted as much as is practical.
Sharing common cost across multiple jurisdictions. John Schofield President of Downers Grove Coalition for Managed Redevelopment, forwarded the concept of cross-jurisdictional cost cooperation. Vehicle maintenance is one just one example.
This is already beginning. Westmont and DG will soon share Ops Center expenses and personnel. DG went to the cheaper suburban FIAT rather than going it alone with a dedicated SWAT team. We now share one Fire Station coverage area with Woodridge-Darien. Exploring shared use of like purposes provides savings via economy of scale. If all your kids eat the same cereal, do you buy them each a box of the same cereal, or one bigger cheaper box? If everyone buys paper, and one body uses so much they get a better deal, why not share that savings?
The unions have to help. There are two key labor contracts coming in 2011: fire and police, the two biggest personnel expenses. Consider the concept of using dollars instead of percentages in the two union contract negotiations coming up, and try to peg those dollars uniformly across the ranks. A $500 raise instead of a 1% raise saves several thousands by avoiding higher salaries triggering higher increases. Freezing the size of the steps is imperative for sustainability without excessive downsizing. Consider opening the books to the unions and asking them to help find the money-it isn’t there, and sometimes that is best discovered by all parties. Keeping jobs is better than eliminating them to make ends meet.
Some of these might work, none of these might work, but it’s certainly worth looking at them all. If any council member wants, they can respond with their own suggestions and ideas. Any email responses from elected officials will go up as a comment.
I went back through several Annual TIF reports, and as I’ve written about in the past, it’s a tale of two TIF’s.
The Ogden TIF is clean and at least some personnel expenses are accounted for, whether they are legal, planning, or accounting costs.
The Odgen TIF was created in 2001. Then TIF administrator Dave Fieldman, and now Mike Baker, have employed PAYGO principals which has directly translated into saving (by avoiding) several hundred thousand dollars of interest-only expense payments.
Not to detract in any way from the excitement and anticipation surrounding the upcoming Grove Fest (which we hope will be enormously successful), but the following article about the recent â??Taste of Lombardâ?? event makes one think that cancelling Heritage Festival this year may have been a needless overreaction. http://www.mysuburbanlife.com/downersgrove/newsnow/x41627828/Taste-deemed-tasteful
Instead, it would appear that with some creative thinking and proactive planning, a very successful and fiscally responsible Village-sponsored street festival could have been held in 2010. Oh well. But no use crying over spilled milk, letâ??s count our blessings and support next weekâ??s DG Rotary Grove Fest!