Village's $44.5 Million Budget Back to Drawing Board

The expected approval of the $44.5 million budget ordinance for the 2011-2012 fiscal year was  postponed during Monday night's village board meeting due to concerns and questions raised by residents and trustees.

A major point of contention was a transfer of $500,000 from the water and sewer fund to the general fund. In the proposed budget, an increase of 40 percent for water and sewer rates will hit residents and businesses within the year.   

“If we don’t divert the $500,000 to the general fund, could that lessen the impact on water and sewer rates?” Rich Sustich, trustee asked.

“We are not going to be able to create any other revenues than what you see in the budget,” said Bob Vitas, village administrator.  “Changes in current fund transfers will cause reductions in services.”

“The budget will be short that amount (if the transfer is not made), so the board will have to decide what services will be cut to reflect that shortfall,” said Al Zochowski, finance director.

During the public hearing portion of the board meeting, a resident voiced strong opposition to transferring any revenues from the  fund.

“Money has already been taken out of the fund," said Jim Tarbet, resident. "The water and sewer fund is owed $3.8 million dollars if you approve this budget the way it is."

There was additional concern over using the hotel tax to pay for the July 4 fireworks celebration at Paulus Park.

“Revenues from the hotel tax should be used to draw people in to visit Lake Zurich; for uses such as advertising our downtown in the future or promoting the village in other ways,” said Jeff Halen, trustee.   

Halen said using it to pay for an event such as the fireworks is too far away from the funds intended purpose.

How the village is planning to use non-home rule sales tax revenues also was at issue.

“These taxes are for infrastructure only,” Tarbet said. “Not parkway trees, pick-up trucks for public works; maintaining something is not infrastructure.”

“It appears we are not using the non-home rule sales tax revenues for pure infrastructure, it is a gray area,” said Halen.

“When we start using those revenues for other things such as vehicles, how do we guarantee that won’t just continue into the future?” Halen asked.

Halen said while it is permissible, the board and village staff previously discussed that revenues wouldn't be used for any non-infrastructure needs. 

Prior to the board meeting, village staff invited residents to give their input on the budget process and provide any suggestions on how to reduce costs or increase revenues.

Just two residents offered their ideas, and Tarbet was one of them.

“I’m very disheartened about what is within this budget, approximately a month ago a request went out for anyone to bring forth ideas about cuts," said Tarbet. "I submitted three pages of bullet points, with areas to improve efficiency and incur savings,” said Tarbet.

“I got a last minute response with an attitude of ‘why are you telling us how to do our job,’ and very few points were commented on,” Tarbet added.  

“I would ask that we look at how to respond to all of Mr. Tarbet’s suggestions,” said Sustich.

Halen stated additional budget concerns, consisting of strategic priorities not being tied to the budget, no clarity about planned employee raises, as well as the salary of the assistant village administrator and the fact that village employee car allowances were taken away but then added back in to salaries.

Vitas warned that any changes to line items within the budget could have a ripple effect on major village plans.

“Some of the obligations are dictated by contract, others are covered by administrative overhead; changes will affect the strategic and operational management plan, as well as the capital improvement plan,” said Vitas.

The board was polled at the end of the discussion, and not all trustees believed the budget needed a second look.

“The budget, once adopted is a road map, it is not something that absolutely has to be followed,” said Jim Johnson, trustee. “If we find we can save money, we can always not spend and realize some of our board goals while doing that.”

“Because of the time involved, and I don’t want to see a $500,000 shortfall, I am willing to go with the budget as is,” Johnson added.   

The majority of trustees want village staff to understand and rectify concerns and questions before the adoption of the 2011-2012 fiscal year budget, which is tentatively set for the next board meeting on Monday, April 18.

“It would be a great opportunity to address lingering questions, and as a board (we need) to be specific, so we are clear as to the policy decisions,” said Jonathan Sprawka, trustee.

“I think we need to go back to the list, and make sure Mr. Tarbet’s suggestions are responded to adequately,” said Sustich. “I also want an understanding of the implication of not transferring funds from the water and sewer fund.”   

“I would also like to see the general fund impact of removing the $500,000 transfer from water and sewer,” said Sprawka.   

Trustees were directed to e-mail questions and concerns to Vitas by end of business Wednesday. Vitas said he would contact Trustees Dana Rzeznik and Tom Poynton to make them aware of the deadline, since both were absent and excused from the meeting.

Concerns will be addressed and staff could go back and reconstruct the budget to reflect any changes before May 1 when the budget is set to be implemented, said Vitas.  

Approval of the budget is scheduled to occur by the end of the month.