Category Archives: Budget

Normal has plenty of company

Based on the discussion at Monday night’s Normal Town Council meeting, it appears the town will be able to address our budget situation without cutting jobs.  It would appear that our mix of budget cuts and revenue increases will leave our general fund in the black this year and allow the Town to slowly build up its reserves over the next five years, averting a projected end-of-the-year budget deficit in 2010-11 and beyond.

The main culprit has been a projected $1.3 million drop this year in state income tax receipts and flat sales tax collections.IMG_1462

You don’t have to spend much time on line to see the revenue picture impacting communities all around us.

If the snow plow breaks in Peoria, they’re not sure what they’ll be able to do with the city’s $14.5 million budget deficit.

To the south in Decatur, the city entered the current fiscal year with deficit spending in three of the past four years.  They projected a $3 million general fund defcit for the current fiscal year and planned to postpone some capital improvements and adopted a voluntary severance plan for employees.

Read about Danville $1.5 million deficit and its desire to rebuild its reserves.

It would interesting to know how Bloomington is doing.   Last we heard, they were projecting they would end the current fiscal year with a roughly $2 million deficit, after entering the current year with a roughly $5 million deficit.

 It’s not just Illinois that’s hurting.   Cities all across the country are being pinched.

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Filed under Budget, City of Bloomington, Taxes, Uncategorized

So what happened Monday night at City Hall?

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.

2009 Election

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.

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Filed under Budget, Taxes, Town Council, Uncategorized

Rating agencies keep Normal’s creditworthiness in top 3 percent nationally

The Town of Normal sold two fixed-rate bond issues this week at 3.9 percent, lower even than the projected 4.1 to 4.3 percent range our financial gurus thought we might see.

The Town's putstanding bond rating means local government can borrow money at lower rates.  The Town's bond payments are covered by a combination of a quarter cent sales tax (enacted in 2000 for the purpose of repaying redevelopment bonds), a large portion of the hotel-motel tax, and some food and beverage tax revenue.  Uptown TIF revenue also covers a portion of the bond payments.

The Town's outstanding bond rating means local government can borrow money less expensively. The Town's bond payments are covered by a combination of a quarter cent sales tax (enacted in 2000 for the purpose of repaying redevelopment bonds), a large portion of the hotel-motel tax, and some food and beverage tax revenue. Uptown TIF revenue also covers a portion of annual interest payments.

The lower rates will result in significant savings over the course of the issue which will help fund public portions of Uptown redevelopment . 

The Council voted two weeks ago to turn an older variable rate bond issue into a fixed rate, locking in more than $1 million in accumulated interest savings as a result of rates which were below 1 percent for a time.

A new 2009 issue takes the Town’s general obligation debt to about $80 million for Uptown redevelopment.

The best news was that despite the national economic slowdown, despite lower than anticipated sales and income tax receipts, and despite the less than stellar financial performance of our next door neighbor, all three major bond rating agencies (Standard and Poors, Moody’s and Fitch) left the Town of Normal’s bond rating unchanged.

At AA1, the Town’s bond rating is nearly unmatched among local governments in the United States, ranking in the top three percent of all U.S. municipalities, a testament to local economic conditions and long held conservative financial management philosophy of underestimating revenues and overestimating expenses.

The State of Illinois is borrowing billions to balance its fiscal 2010 budget.  Rating agencies are deciding whether to downgrade the state’s bond ratings, which could have a negative ripple effect throughout the state.

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Filed under Budget, City of Bloomington, Sales tax collections, TIF, Town Council, Uptown Normal

Water rates will rise in Normal. How much and when are still a matter for debate.

After a work session prior to Monday night’s council meeting, it appeared likely that we will see an increase in Normal water rates — sooner rather than later.

And that unlike recent years, the rate increase could be substantial.

About a year ago, the Normal Town Council received a report from a consultant who concluded that given the current and future capital needs of the system and the increased costs of pumping and treating water, the current rate structure is unsustainable.

In his introductory comments, City Manager Mark Peterson said Normal’s not alone is addressing water rates.  Other nearby communities like Peoria and Champaign are proposing large increases.   However, Peterson said the Town’s current band aid approach of 10 percent increases every three years isn’t keeping up with costs. 

“We have not compromised the integrity of the system.  But if we don’t come up with a more permanent solutions, we will have an issue,” Peterson cautioned, adding that there’s no hurry to act, but that the “sooner we can agree on a course, the better.”

Running a municipal water system is a costly proposition, particularly when you're dealing with the U.S. EPA.   Repainting an elevator water tank would require full containment of the structure and cost in the neighborhood of $700,000.   While I would take issue with the priority on several of the projects, Town staff have identified $58 million in unfunded water projects, including a $15 million water treatment plant expansion not needed for 20 years or so.

Running a municipal water system is a costly proposition, particularly when you're dealing with the U.S. EPA. Repainting an elevated water tank would require full containment of the structure and cost in the neighborhood of $700,000. While I would take issue with the priority on several of the projects, Town staff have identified $58 million in unfunded water projects, including a $15 million water treatment plant expansion not needed for 20 years or so.

 

Personally, I have been planning for this day.   The current economic conditions make any significant increase a last resort.   I agree we need to take our time on this to make sure we are doing what’s right for the water system and for the water users and ratepayers of the community.

Because municipal water departments are so-called “enterprise funds,”  they must be self sustaining.  That is, water rates, tap on fees, and other water charges must be high enough to pay for the system’s fixed administrative and variable costs.  

In addition, capital projects likes replacement water mains, new wells, water treatment plant improvements, or water tower repainting and repairs must also be funded out of available water revenue.

Dipping into the general fund to pay for water projects is to be avoided at all costs.  

In Normal, we believe it is a wise budget policy to maintain a budget surplus if at all possible.   Our general fund reserves are roughly 10  percent of the overall Town operating budget, or about $5 million.    This year, the poor economy and its impact on sales tax collections will force us to end the current fiscal year with a fund balance of slightly less than 10 percent.

In the case of the water fund, the consultant recommended a 35 percent surplus to be achieved in the fifth year following a rate increase.  Town staff is recommending 20 percent.  

I have asked staff to come back and re-compute the proposed water rates based on  maintaining 10 percent surplus and lower levels of annual capital improvements to fund a long list of potential, unbudgeted water projects.

As long as I’ve been on the Town Council, and before then, the Town has typically approved a 10 percent increase in water rates every three years.   In recent years, to address increasing capital needs, the council imposed a flat $2.50 monthly maintenance fee, regardless of the amount of water used.

Today, our water rate is $3.96 cents per 1,000 gallons of water.  

As my council colleague Cheryl Gaines pointed out, you can buy 1,000 gallons of treated Normal water for about the same price as you can purchase a case of bottled water on special at Sam’s Club.   That’s three gallons of water.

Bottled water is more than 300 times more expensive than cool, clean refreshing Normal tap water.

City manager Mark Peterson pointed out that’s about two bottles of water purchased at a major league baseball game for the price of a 1,000 gallons of great tasting Normal tap water.

So, relatively speaking, our water’s a pretty good deal.

Town staff would like us to boost the rate about 35 percent the first year to about $5.25 per 1,000 gallons.   The average family that washes a load of clothes, showers, and uses the dishwater regularly uses about 6,000 gallons per month.  

The average Normal household would see their monthly water bill jump $8.99 from $26.26 to $35.25, under the staff proposal.

A single person using about 2,000 gallons per month would see their monthly charge go from $10.42 to $14.25 in the first year.

The proposed rate increases would occur every year and help the Town set aside $2 million for water-related capital projects each year, which would represent a fairly aggressive reinvestment in an aging infrastructure.   Again, I have asked to see what the impact on the proposed rate increase would be with a slightly less aggressive approach.

Staff recommends any rate increase become effective Oct. 1, 2009.   Mayor Koos would like to look at stretching out the increase over a longer period to see how that would impact the proposal.

I’ll have more on the proposed water rate increase this week.

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Filed under Budget, Town Council, Water

Final tab on 2008-09 snow removal was $588,644

The U.S. Environmental Protection Agency declared Friday that carbon dioxide and five other greenhouse gases “may endanger the public health, safety and welfare.”nasa-graph

EPA’s much anticipated ruling most certainly accelerates the drive toward  a federal  cap and trade  policy of imposing strict new limits on greenhouse gas emissions and selling offsets to business and industry. 

Only concern about the policy’s economic impact in the worst economic conditions in decades and a serious lack of detail have delayed what appears to be inevitable.

When Congress acts — this year or next — will it spark  innovation, create jobs, and generate wealth in a new green economy?   Or will it punish carbon consumers (all of us) and put the U.S. at a severe economic disadvantage compared to the developing world?

Regardless, the temperature finally hit 70 Friday, and it’s probably safe to declare an end to winter.

Normal Public Works Department put out a report showing that the 26 snow events from Nov. 30, 2008 to Apr. 6, 2009 cost taxpayers $588,644, up about $42,000 from last winter.

Over the past two winters, snow removal crews have responded more than 50 times at a cost of about $1.1 million.   That’s a signficant expense.   Only about 10 percent of that was overtime.  

The materials line represents the Town’s biggest cost area in snow and ice removal.   And salt keeps getting more expensive.

Whatever the our climate has in store for us, let’s hope next winter doesn’t offer a repeat.

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Filed under Budget, Green, Snow and Ice Removal

Normal Police Department to seek federal COPS grant for three new police officers

The U.S. Justice Department Office of Community Oriented Policing Services (COPS) recently announced that $1 billion from the federal stimulus bill will be allocated to hire 5,500 police officers at agencies around the country.

Normal Police Department will be applying for three new officers under the program.march-2009-just-about-normal-016

This program was created in 1994 and funded more than 100,000 new police officers through the 1990s.   In the past, the Town has added positions funded by COPS.  

The program pays for 100-percent of the salary and benefits for entry-level officers for three years.   At the end of three years, the police agency is required to the make the positions permanent and fund them locally. 

As long as the federal funding is available, it makes sense to apply for it.

I hope we’re successful.  

The 2008 Town of Normal Annual report does a good job of describing the police department and its various programs.   It shows that Normal has 62 patrol officers, nine sergeants, four lieutenants, and two assistant chiefs.

If Normal receives federal COPS dollars for three new officers.  The ranks of patrol officers would increase 4.8 percent.

The police department has 92 full time employees and 13 part timers for a total 0f 105 employees.

As I wrote last month on this site, crime is down for the first two months of the year compared to the same period a year ago. 

The Town of Normal Commitment to Public Safety — $91.8 million over the next five years

The  Town of Normal has budgeted a shade under $10 million to operate the police department this year.   For those of you who like to chew on big numbers, Normal taxpayers will spend a total of $54 million on police protection over the next five years.

Between police and fire protection, we will spend $91.8 million on public safety over the next five years.  

I’d say that’s a pretty substantial commitment to basic services.

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Filed under Budget, Crime, NFD, NPD

Tax the solicitors? Depends on who we’re talking about

The Town of Normal has an ordinance on the books that requires door-to-door solicitors to register at Normal City Hall.

SEC. 22.4-1 REGISTRATION REQUIRED. It shall be unlawful for any person to solicit within the Town of Normal without first having obtained a Registration Certificate from the Chief of Police or his designee. Registration Certificate will be issued in a nondiscriminatory, nonarbitrary manner. Registration shall apply to nonprofit, religious, charitable, and commercial activities alike. Registration Certificates are valid for thirty (30) days including the date of issue, unless sooner suspended or revoked as provided herein.

When solicitors become a problem, you can always ask to see  their permit.  If they can’t produce one, then you can assume they haven’t registered.   In the past, our police have encouraged some of these unwelcome, unpermited solicitors to take a hike.

As we considered the range of new fees for in the upcoming budget, a $20 fee for recouping the cost of issuing soliciting permits was raised as a possibility.   After all, it takes time for the police department to issue the permit and respond to calls when solicitors become a problem.  

Town staff estimated 400 soliciting permits might be issued in a year.   A $20 fee would generate $8,000.

At our budget work session last month, the Normal Town Council briefly discussed the impact of charging a fee for the solicitor’s permit.  We learned that the major fundraiser for the ISU Habitat for Humanity Chapter involves 200 volunteers going door-to-door.   200 x $20 would pay for a lot of building materials.   Out of that discussion, Town staff proposed that the council cap a not-for-profit’s permit at a maximum $200.

Even then, the Habitat chapter has contacted the council asking for a not-for-profit exemption.  Who can blame them?  

Then I started thinking about everyone else like the lawn care kid who showed up last week and asked me if I was interested in having my yard analyzed for free.   I thought about taking my daughter up and down the street to sell Girl Scout cookies.  Were we visiting our neighbors or soliciting? 

I flashed back to times when I have passed out campaign literature and asked citizens to sign my nominating petitions and wondered if I was a solicitor.   Visits from missionaries, international students, and people hawking everything from cleaning products to citrus fruit to firewood all came flooding back.   Who was not-for-profit and who wasn’t?

A few summers ago our neighborhood began to receive Sunday evening visits from the out-of-town ice cream truck.   It didn’t take long for the ice cream truck’s novelty to wear off and become an annoyance.  I would dread the sound of the amplifed music coming from blocks away.  

It was one of those repetitive melodies that stuck in your head long after the truck and its over priced inventory were gone.  

My guess is $4 gas last summer kept the itinerant ice cream man from his appointed rounds.  

If we should tax anyone, we ought to slap a big fee on the ice cream man for playing the annoying music.   Might keep him away.

Or maybe we should just stick with having him and everyone else register, forget about the solictor fee, save ourselves the trouble of trying to make distinctions, and call it a day.

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Filed under Budget, Town Council