By Tony Scott
An increase in water rates is one of many suggestions made by City of Yorkville staff in a memo related to the upcoming fiscal year 2010 budget.
A memo from Finance Director Susan Mika outlines how the city’s various funds will be affected in the next fiscal year, which starts May 1 for the city. The budget still needs to be reviewed and then approved by the City Council.
The memo states that the city “has sustained operating deficits for two years prior to this past fiscal year, and the City’s fund balance (its savings account) and the water department’s fund balance (a stand-alone savings account) is all but depleted.”
“These operating deficits are a direct result of the downturn in the economy and higher legal costs from ongoing litigation associated with the Fox Moraine landfill application,” Mika’s memo states. “In order to continue to provide even essential public safety services, these fund balances must be replenished.”
Mika states in the memo that she and City Administrator Bart Olson held one-on-one meetings with each department head to go through each department’s budget line item by line item.
“All new requests from department heads were reviewed by the mayor, the city administrator and myself for usefulness, cost efficiency and their relationship to established City Council goals,” the memo states.
Mika said city officials took a conservative approach to the upcoming budget.
“While taking a conservative approach on revenues, the same approach was taken with expenses,” her memo states. “Not only were expenses scaled back, but there will be no training and conferences for staff unless they need to complete education requirements for the renewal of a professional certification. The need for re-certification is important, as staff needs to be certified in their various fields to provide specialized services.”
Mika’s memo states that the city is “expecting to break even by the end of this fiscal year” which means it won’t use its fund balance.
“While compiling the budget proposal, we believe we took a conservative approach to forecasting revenues,” she states. “We are not anticipating growth and will not increase the revenues until the growth actually happens. Thus, if an increase in revenue does occur, we are recommending that surplus be reserved in our fund balance or be used to fund portions of the capital improvement plan.”
The city, however, is not anticipating being able to fund proposed capital projects, according to Mika.
“There are several projects that are being proposed, however there is little to no funding available for these projects to move forward,” she states. “The six-year capital budget is proposing $8,098,000 in improvements and we are only able to fund $356,000. This is another year that we are not able to fund capital projects due to the lack of revenue. Various pieces of infrastructure are not going to receive the routine maintenance and improvement that is needed which can cause problems in the future and be more expensive to repair/replace.”
Staff recommends five percent hike in water rates
Another portion of the city’s budget that needs work, according to Mika, is its Water Fund. The expenses of the fund, which include the costs of “all personnel and related expenses of running the water system,” according to Mika, are offset by water rates. According to Mika’s memo, the rates have not been changed in 13 years.
Also, Mika said, the expenses related to the cost of the water system expansion, such as water towers and mains, maintenance and other capital costs, including emergency repairs to wells, are offset by tap-on fees, bond proceeds and, partly, by water bills.
Mika anticipates a deficit in the Water Fund of $1,046,000 at the end of the current fiscal year.
To “close the gap,” city staff has proposed a five percent increase in water rates and implementing an infrastructure fee to cover the cost of bond payments for system expansion costs. The infrastructure fee would be $12.50 per month.
“This infrastructure fee can be removed in the future, if approved, once new developments come online and water connection fee revenues are restored to prior levels,” Mika’s memo states.
Mayor Valerie Burd said the city relied on new building for tap-on fees, for example.
“Although the water usage has paid for itself, what hasn’t paid for itself was all the expansion that was done,” Burd said. “Because we haven’t had all of this new growth, we’re facing increasing bond payments on these expansion issues and we don’t have the money. We just don’t have it.”
Several other proposals to increase revenue are included in the memo. They are:
•Enactment of a five percent amusement tax, with total estimated annual revenue of $50,000.
•Change in the telecommunications tax from five to six percent, with total estimated annual revenue of $100,000. The tax is on messages sent from or received by phones and Internet devices; raising the rate would put the city on par with Sugar Grove, Montgomery and Oswego, according to Mika’s memo.
•Change in the senior garbage subsidy, which would result in an estimated $120,000 in annual revenue.
•Reimbursement from the library for financial and property maintenance services, with total estimated annual revenue at $35,000, using a cost-sharing proposal with the Library Board.
•Health insurance opt-out for employees, which would yield $100,000 in new annual revenue.
Burd said the revenue increases are options suggested by city staff to be reviewed by the City Council.
“They’re looking at all different kinds of things,” she said. “We’re not saying, do all of them. We’re just saying, here’s what’s on the table, and what do you think. We’re going to have to do something.”