The Normal Town Council spent another evening discussing how to deal with a revenue shortfall. Unchecked it would mean going from a surplus in the general fund to a deficit in two years.
The Town is not currently in a deficit situation. In fact, the town will end the current 2009-10 budget year with a surplus in its main operating fund. But due to reduced state income tax collections and state and local sales tax receipts, the anticipated eight percent cushion will fall to 2.5 percent of total general fund expenditures. Our finance department recommends an end of year balance of eight to ten percent of general fund expenditures.
In this year's council campaign, we were well into the deepest recession in my lifetime. My top priority had to be maintaining the fiscal integrity of the town. And I remain committed to that goal. We will get through this without experiencing the kind of budget crises have enveloped cities unwilling to make difficult decisions.
The council’s goal is to avoid a deficit and to shore up the general fund reserves through a combination of budget cuts and tax increases.
While it’s tempting to simply cut your way out of your predicament, we discovered that you have cut far too deeply into the basic services that define Normal town government. That was not an option.
Two employees signed up for the early retirement incentive. Understandably, many employees close to retirement considered taking the benefit, but concluded that they would rather work, a typical response in an uncertain economy.
Still, staff identified several areas that could be cut without impacting services too much.
- Shiny cars and trucks take a back seat to programs. At this time, it didn’t make a lot of sense to me to have enough vehicle reserves on hand to replace every police car, garbage truck, or mower at once. $1 million from this fund will be transferred to the general fund over the next two years. As far as I’m concerned, excessive vehicle replacement reserves are a good place to start.
- Program cuts that are significant but are manageable. The Harmon Arts Grants are a great gesture, and we are able to help several arts programs in the community, but we can eliminate those dollars while funds are tight. The same holds true for Normal Newsline, half of the town annual tree planting budget, City Vision, and the parks and recreation program brochures. Eliminating electronic recycling will save $175, 000 over five years. Turning over operations of the Activity Center to Normal Township will save $323,000 over five years. We need to develop a cost sharing arrangement with Unit 5 on crossing guards.
- The 1/4 cent sales tax adds a quarter to the purchase of $100. While I don’t relish it, imposing the quarter cent sales tax is the most painless way to collect $1.3 million per year. We have done our best to delay matching Bloomington’s rate. I had hoped we could hold out. We no longer have that luxury.
- A temporary property tax hike. The 4.3 cent per hundred dollar rate increase would allow the Town to cover more of the cost of state-mandated employee retirement benefits with the property tax. It would boost the tax bill of the owner of a $200,000 home about $30 per year. We resisted a proposal to boost the property tax another 6 cents for operations. In my mind, when the economy recovers, this tax hike goes away before the Harmon Arts Grants or the parks and recreation brochures return.
- Other revenues include increasing the parking fines for the first time in 20 years to $20, boosting summer camp fees, imposing towing fees for cars involved in alleged crimes, and new technical rescue and auto extrication fees (usually born by insurance companies).
We said no to moving up the second half of the planned garbage fee increase. The water/garbage bill has provided too much sticker shock as it is this year. There was no reason to provide another premature shock.
I said no to a “convenience fee” for paying your bills on-line. That’s my definition of an “inconvenience fee.”
If we follow this plan, we will build up the Town’s general fund reserves to near $3 million by March 31, 2011 and $3.8 million the following year.
After the work session, the council met in executive session for about an hour to receive information about the potential for involuntary job cuts. At this time, there does not appear to be any council appetite for layoffs.
Hopefully, that relieves some of anxiety that I sensed in the city council chambers Monday night.
This is an unhappy but necessary part of the job. During my re-election campaign, I pledged that the financial integrity of Normal Town Government would be my top priority. It will remain my top priority for the rest of my term.
Program cuts and tax and fee increases are necessary at this time to prevent a budget crisis. The economy will turn around, and these actions will help the Town rebound quicker than other communities.
Our employees are doing a super job working through this time of reduced revenues and providing the kinds of services that make us all proud to live here.