While Wilmette’s financial picture appears to be bright, with projected revenues up and expenditures under budget, members of the Village Board and Village staff expressed uncertainty about the potential impact of the state’s budget woes at their Committee of the Whole meeting on July 28.
“All municipalities are waiting with bated breath over what will happen in Springfield,” said Village Manager Timothy Frenzer.
Already, the Village has lost $36,000 in state shared revenues, and Motor Fuel Tax (MFT) distributions are being withheld. At the meeting, Frenzer explained that Governor Bruce Rauner has proposed a $1.3 million reduction to the village’s Local Government Distributive Fund (LGDF) and a 2-year property tax freeze that would reduce tax revenues by $1.2 million. The LGDF is Wilmette’s share of state income taxes that is returned to the village.
“The problem with that is it goes a lot deeper than the two-year freeze,” Frenzer said, expressing concern that Gov. Rauner’s plans could cause a permanent reduction in the way that the village raises revenue and not just a two year hit.
At this point, Board members and staff expressed dismay over Governor Rauner’s plan, but were uncertain about the future.
“Nobody knows what is going to happen,” said President Bob Bielinski.
Frenzer noted that while the village has ample reserves to offset the state cuts in the short term, the reserves will not cover a long-term revenue reduction. If Gov. Rauner’s plan becomes a reality, Frenzer anticipates cuts to personnel spending, which comprises 75% of the village’s budget.
But when the meeting turned to the village’s current revenues, the mood was more upbeat. Assistant Village Manager Michael Braiman reported a projected $700,000 surplus in the general fund, while expenditures are projected to be under budget by $200,000. Village Finance Director Melinda Molloy reported that sales tax revenues are up 23% in the last year, since the home rule sales tax was passed. Employment rates have continued to rise as the economy improves, while building permits increased and home values have risen with a heated housing market.
When the discussion turned to property tax levy rates, board members again began to raise concerns about the potential impact of the Illinois proposed budget. In 2015 the tax levy increase was 3.35%, which was the smallest percentage increase since 1997. Some board members supported a higher tax levy increase given the uncertain future.
“I think you have to be more cautionary and to me 3.5% on existing property seems right,” said Trustee Carol Ducommun. “Put a little more in your pocket now because I think these scenarios are more likely than not,” she added.
But Trustee Cameron Krueger supported a 3.3% increase, noting that the board had been successful in keeping property tax increases down. “I would like to see our growth rate slow as much as we can,” he said.
Trustee Ducommun worried that if the state were to freeze property taxes, then taxes would be frozen at the lower rate. Trustee Julie Wolf also favored a higher increase, noting that it was a step in the right direction and that the village was still playing catch up from the Great Recession.
The Village Board and staff are still in the planning stages, since the Tax Levy Ordinance will not be adopted until December. Going forward, the Village Board will consider capitol improvements at the September Board meeting and the 2016 Budget will be presented at the October 13 Board meeting.