Trustees voted 4-1 Thursday night to adopt a fiscal 2012-13 budget that reflects cuts, a modest increase in general fund revenues and the sunsetting of the utility tax.
Expenditures for the budget, which starts May 1 and end April 30, 2013, are estimated at $45.5 million, while revenues are anticipated to be just over $43 million. Overall revenues are projected to be 2.2 percent lower than this year’s budget due to the intentional drawdown in the motor fuel tax fund ($226,783) and the capital projects fund ($1.5 million).
Interim Village Administrator Roy Witherow, Finance Director Jodie Andrew and interim Budget Director Douglas Ellsworth provided a summary of the 2012-13 budget in the lengthy Lake Zurich budget document, which can be seen on the village website within the agenda for the April 26 meeting.
The group, which led the budget formation, said in the summary that the board decided to use a "bridge budget" concept. The bridge budget, they said, "would present significant expenditure cuts that are not sustainable in the long run" with the plan for staff to "develop a comprehensive capital improvement plan, five-year financial forecasts, analysis of options to reduce expenditures and a structural review of all departments" in the first quarter of fiscal 2013.
"After two rounds of budget cuts with departments, the general fund was still showing a budget deficit of over $1.7 million," Witherow, Andrew and Ellsworth said in the summary. Using the bridge budget concept, staff cut another $1.4 million in expenditures from the general fund, with the fund balance being drawn down to cover the $771,572 deficit.
Here are some highlights from the 2012-13 budget:
- General fund revenues are projected at $24.4 million, which represents a 2.9 percent increase over this year's budget. Property tax revenues are estimated at $6.5 million, which is 3.6 percent higher than this year. The budget also shows an 8 percent increase in state sales tax revenue, which is estimated at $6 million. The general fund revenues also reflect a loss of $629,999 in utility tax revenues because the utility tax will expire on May 31. (Read more about the sunset of the utility tax in this related story)
- General fund expenditures are estimated at $25.2 million and represent a 4 percent overall increase over the 2012 budget, largely due to: a 2 percent salary adjustment for employees (including due to collective-bargaining agreements); an 8 percent increase in health care costs; and a 12 percent increase in workers compensation and general liability insurance expenses.
- The village expects to receive $1.1 million in revenue from the non-home rule sales tax. The village initially had anticipated receiving $1.7 million in revenues, but a three-month lag time for the state to collect and remit the tax was not factored in.
- A deficit of $805,471 is projected in the tax increment financing district allocation fund, with revenues estimated at $1.4 million and expenditures at $2.2 million. Staff projects that revenues will drop to $1.3 million in fiscal 2013, from $1.5 million this year, due to the decline in market values and the rise in real estate assessment appeals.
- Revenues in the water and sewer fund are expected to see an operating deficit over just over $1 million. The water and sewer rate increase didn't take effect until Jan. 1, so revenues are expected to be $1.2 million less than budget.