Tag Archives: budget

City Council, City of Peoria

How would you plug the city’s deficit?

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The Journal Star is reporting that taxes and/or fees will have to be raised to plug the deficit, according to Mayor Ardis:

Ardis didn’t say which revenue will be increased, other than to say it could be a combination of things, such as a possible sales tax increase or a water utility fee…. The mayor did say it was unlikely the city’s portion of the property tax will be increased, citing other government bodies such as District 150 that have already increased their tax rate. “It would be the absolute last thing we’ll look at,” Ardis said. “(The property tax) is tapped.”

Wait a minute. The reason we can’t raise the property tax is because other taxing bodies have “already increased their tax rate”? That makes absolutely no sense, but let’s just accept it for the sake of argument. Why then should we consider raising the sales tax, considering the county just raised their tax rate? Why doesn’t the same “logic” apply?

And if the city’s revenue-producing abilities are limited because other taxing bodies are raising their rates, then the first thing we need to do is stop giving any of our revenue to those other taxing bodies. For instance, the city should immediately stop giving any tax money to the park district or the school district. Does that mean that there will be no programming on the riverfront? Tough! Does that mean that district 150 won’t get city-provided crossing guards? Sorry! The city needs to use all its available revenue to provide its own core services, not services for other taxing bodies.

Frankly, the mayor’s comments should come as no surprise. A couple council meetings ago, council members were given a packet of information available for download from the city’s website about the budget. Included was this document outlining possible cuts and revenue increases. In fact, since we have that info, here’s what I’d like to do:

I’d like you to pretend you’re a city council member. (You should be feeling a power trip right about now; if you don’t, you’re not pretending right.) Okay, council person? Now, you have to plug a $10 million structural budget deficit by either cutting costs, increasing revenues, or a combination of both.

How would you do it?

You can use the options provided in the aforementioned report, or add your own. It has to be realistic (so, for example, “print money out of thin air like the Federal Reserve” is not acceptable). Also, it has to be a long-term solution because this is a structural deficit. Short-term stop-gap measures don’t count.

Just to make things easier, here’s a summary of options outlined in the report:

INCOME OPTIONS

  • Property Tax — Each $.01 added to the levy raises $200,000. The owner of a $200,000 house would pay $6.60 more in property taxes annually per penny.
  • Water Utility Tax or Franchise Fee — A 5% utility tax or franchise fee placed on the use of water would yield approximately $1,200,000 each year.
  • Sales Tax — An additional .25% increase in the home rule sales tax would bring in an estimated $3,850,000 each year.
  • Package Liquor Tax — 2% tax on package liquor would raise about $700,000 annually.
  • Parking Tickets — If the $10 fine was raised to $15, an additional $90,000 in revenue annually.
  • Garbage Fee — Peoria residential properties pay $6 each month in garbage fees. For every dollar the monthly rate is raised, the City would gain an additional $336,000 annually.
  • Motor Fuel Tax — The City currently collects $.02 per gallon of fuel sold. For every penny added, approximately an additional $400,000 in revenue.
  • Stormwater Utility Fee — Rough estimates indicate charging $2.00 per month per “residential unit” would generate about $1.2 million.

COST-CUTTING OPTIONS

  • Wage Adjustment — Cutting the salary increases of staff from 4.75% (union) and 3.5% (management) to 2.5% across the board would save $1,839,113.64. Cutting them to 1% would save $3,088,880.53.
  • Voluntary Separation Initiative — No amount given, but the idea would be to offer early retirement to long-time employees who make high salaries, thus reducing the total payroll.
  • Service Cuts/Layoffs — Again, no amount given, since it would depend on which services the city decided to cut. What services do you think should be eliminated? We may be able to find out how much such a cut would save.
  • Medical Premium Increase — If the rate at which employees participated in the base premium cost were raised by 5% for all types of coverage, the City would save an estimated $811,000 in FY2010, based on 2009 premium costs. A family membership in the PPO would cost the employee $408.92 each month vs. the current rate of $272.61.
  • Reduce Capital Budget — For FY2009, Council approved a Community Investment Plan that funded $21,434,873 worth of projects. Of that amount, only $8,908,895 was in discretionary spending (funding sources not strictly limited to capital projects). This amount represented only 55% of the project funding ($17M) identified by staff and Council.
  • Use of HRA Taxes — The primary and obligated use of the proceeds of the Hotel-Restaurant-Amusement Tax is to pay down the Civic Center bonds. Annually, any revenue remaining after bond payments is apportioned by agreement to the Civic Center Authority, Peoria Area Convention and Visitor’s Bureau, ArtsPartners and other community organizations. Many communities use their HRA taxes to support operating or capital projects.

Okay, you have the raw data. Now find $10 million. On your marks. Get set. Go!

City Council, City of Peoria

Council Roundup 3/24/09 (Updated)

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Some notable items from Tuesday’s council meeting:

  • First District Councilman Clyde Gulley voted with the majority of the council to give stimulus funds to a private not-for-profit organization in the third district instead of repairing sidewalks in the first district. Gulley is running unopposed on the April ballot to represent the first district for another term.

  • The council learned that tax revenues are down, resulting in a projected $2.5 million budget deficit. It could get worse next year. Naturally, the staff is looking to cut police officers and road repairs to make up the difference. They’re not talking about laying off any police officers — just not filling vacant positions. So public safety and public works will suffer, while private developers of the downtown Marriott will rake in $40 million in public money. Priorities, you know. Another vacant position they’re talking about not filling: city manager. This is their way of keeping Holling on indefinitely, contrary to the agreement that he would only be temporary until they could get a permanent replacement. They’re going to treat him as permanent, but continue calling him “interim” until some undetermined point in the distant future, evidently.

  • The sales tax just went up 1% within the boundaries of the Hospitality Improvement Zone downtown. These boundaries are very strange — I’m going to try to get a map from the city. Generally speaking — very generally — the HIZ is bounded by Kumpf, Fulton, Adams, and Fayette, but the actual boundary zigzags into alleys (active and vacated) and avoids certain blocks completely. Here’s the map:

    hizmapwithaerial1

    Nevertheless, if you go to a restaurant or bar within the HIZ boundaries, the sales tax on your meal/drinks will now be 11%. If the museum tax passes, it will be 11.25%. Meanwhile, over in Tazewell County right across the river, the sales tax is 8%.

City of Peoria, Streets

The Main Street circle game

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The Journal Star has article today on why Councilmember Van Auken is abandoning plans to improve Main Street:

“We don’t have anything in the budget this year because it’s a ‘maintenance budget,’ ” 2nd District City Councilwoman Barbara Van Auken said Tuesday.

Van Auken said she anticipates in 2009 for more discussions to occur among city officials and neighborhood leaders within the West Bluff Council on how to handle improvements along Main. She said it could be several years before any physical changes along the busy street occur.

That should be “several more years.” This has been pursued ever since the Heart of Peoria Plan was completed in 2002, so we’re at six years, four consultants/studies and counting. But by all means, let’s spend another year discussing it. Maybe someone will say something different.

“I think our goal would be to have each of the neighborhoods in the West Bluff come forward with their ideas on what they would like to see in terms of traffic flow and patterns,” Van Auken said.

Again? How many times will we be going through this exercise? I would submit that the city has gotten more public/neighborhood input on this project than any other road project in the history of Peoria. We’ve had charrettes, we’ve had public meetings, we’ve talked as neighborhood associations and submitted the results of our discussions to the West Bluff Council, and on and on and on. How many more times (years?) are we going to rehash this thing?

The council on Dec. 9 will simply be asked to vote on whether to receive and file the Hanson study, which was completed several months ago.

By 2010 when this is reconsidered, we’ll of course need to do another study with another consultant, which will then get received and filed, and we’ll go round and round and round in the circle game….

City Council, City of Peoria

Secrecy the order of the day at City Hall

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The City of Peoria’s liquor commission can’t even get information on what’s happening with Big Al’s plans to move, resulting in a “no decision” Monday on whether to grant them a liquor license. Via 1470 WMBD radio:

[A] NO recommendation was forwarded to the City Council concerning a change in liquor class for the former EuroJacks and an application for a liquor license at 414 Hamilton Boulevard by the owner’s of Big Al’s. The Commission cited the owners could not produce enough information at this time on specific plans for the properties.

But apparently some city officials know what’s going on, as evidenced by these quotes from a recent Journal Star article:

“They are basically moving to make way for what could be a wonderful development,” city attorney Randy Ray said, declining to discuss specifics. “At this point, it’s just a tremendous opportunity to develop the Downtown.”

Added 1st District City Councilman Clyde Gulley Jr., who represents the Downtown, “we need to move (Big Al’s) because of another project.”

Others involved at City Hall and Zuccarini remained tight-lipped about what they have planned.

The city attorney, first district councilman, and unspecified “others involved at City Hall” all know what this “tremendous opportunity” and “wonderful development” is all about. The rest of us, however, will just have to wait to find out — probably until after it’s a done deal.

Secrecy fever has found its way into the budget process as well. At a special City Council meeting Monday night, it was announced that staff had cut the budget deficit from $2.2 million to half a million dollars. When Councilman Gary Sandberg asked how they accomplished that, he was told he’d have to come in tomorrow and talk to interim City Manager Holling in private to find out. In other words, they weren’t going to divulge that information on the council floor where citizens might hear.

Of course, the sad truth is that most citizens wouldn’t have heard since the meeting was on a Monday when there’s no radio or television coverage like on Tuesday nights. Interestingly, some council members (Van Auken, Manning, Nichting, Mayor Ardis) seemed to know what was going on, while the rest of the council was in the dark about this budgeting miracle.

And it was only a few months ago that the Journal Star reported, “City officials decided in June that this year, the budget process would be more open to the public, transparent, and easily communicated between city staff members and the council.” So much for that plan.

Peoria Public Schools

District 150 explains $6.3 million transfer

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In a previous post, I questioned how District 150 was able to transfer $6.3 million from a debt service fund to operations and maintenance. I posed this question directly to the district and received this answer today:

The applicable section of the School Code is: 105 ILCS 5/10-22.44 (Transfer of Interest) which states in pertinent part: “To transfer the interest earned from any moneys of the district in the respective fund of the district that is most in need of such interest income, as determined by the board. This section does not apply to any interest earned which has been earmarked or restricted… This Section does not apply to any interest earned on any funds for purposes of [Retirement], [Tort Immunity], [Fire Prevention], and [Capital Improvements]. Interest earned on these exempted funds shall be used only for the purposes authorized for the respective exempted funds from which the interest earnings were derived.”

I also asked how the district is earning interest on money that is supposed to be repaying the district’s debt. “In other words,” I asked, “I’m assuming the only way interest could be earned is because there is excess money sitting in the debt service fund – and apparently a lot of it to earn $6.3 million in interest! Why is there so much excess in that account? And why isn’t it and any interest it has earned going to pay off bonds instead of being transferred to operations and maintenance?” They responded:

Taxes levied to repay debt, generally, are received during the months of June through December of a given year with bond (and interest) payments being made in December (of the then current year) and the following June (of the year in which the taxes were collected). The nearly six month lag in time between the receipt of taxes and the disbursement of the same (for bond principal and interest payments) yields income it having been invested. It is this “investment income”, accumulated and compounded over a period of many years, that was transferred; in other words, the interest was not earned in one year on “…excess money sitting in the debt service fund – and apparently a lot of it to earn $6.3 million in interest!” The last recorded transfer, and then only partial transfer, of interest income occurred in 1997. The interest income was not earmarked or restricted for the purposes of paying bonded indebtedness.

This has been quite (ahem) educational for me. I never knew the district only paid bond debt twice a year while receiving tax income continuously. Nor did I know that they could invest that money in the meantime and rack up millions of dollars in interest income over the years. Nor did I know that said interest income could be used for anything.

Nor did I know that 105 ILCS 5/10-22.44 superseded this other part of the school code (105 ILCS 5/1E-80):

All moneys on deposit in the debt service fund shall be held in trust in the debt service fund for the benefit of the holders of the Bonds, shall be applied solely for the payment of the principal of and sinking fund installment, redemption premium, if any, and interest on the Bonds, and shall not be used for any other purpose.

See, this is why I’m not a lawyer. When I, a mere layman, read a statement like, “All moneys on deposit in the debt service fund…,” I think that means all moneys on deposit in the debt service fund. If I were a lawyer, though, I would know that it doesn’t really mean all moneys on deposit in the debt service fund. It means all moneys except interest earned on deposit in the debt service fund. I also thought that when two provisions of a code were inconsistent with each other that the more restrictive one applied. But that’s apparently not the case here.

The question I didn’t ask, but should have, was why they needed an extra $6.3 million in their operations and maintenance fund in the first place.

Peoria Public Schools

D150 transfer raises questions

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I was reading the Journal Star’s article on the school board meeting last night and ran across this statement:

Also on Monday, the School Board […] Approved the one-time transfer of approximately $6.3 million from a debt services fund to the operations and maintenance fund.

Huh? If you’ve ever questioned school budgets before, you probably have encountered an official telling you about how each fund must be kept separate. For instance, if you mention that the school district should have access to plenty of money for operations by simply selling the houses along Prospect Road that they purchased prematurely, someone will tell you that you’re mixing up capital funds with operational funds. You can’t use capital funds to pay for operational expenses.

Well, correct me if I’m wrong, but doesn’t the debt service go to pay off bonds — bonds that are sold for capital expenditures? And how does the school board get around this provision in the Illinois School Code?

All moneys on deposit in the debt service fund shall be held in trust in the debt service fund for the benefit of the holders of the Bonds, shall be applied solely for the payment of the principal of and sinking fund installment, redemption premium, if any, and interest on the Bonds, and shall not be used for any other purpose. [105 ILCS 5/1E-80, emphasis mine]

How can the school board just, all of a sudden, transfer $6.3 million from the debt services fund to the operations and maintenance fund? Apparently these funds not quite as airtight as we’ve been led to believe.

City Council, City of Peoria

Updated budget information now online

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Want to know what’s happening with the City’s budget? You’re in luck (the following is from a press release):

The City’s budget website – www.peoriabudget.com – has been updated to include the entire preliminary budget documents. The Mayor and City Council charged staff with creating a budget process that was more transparent, more open to public involvement and built more alignment with Council goals and priorities. For the first time in the City’s history, the preliminary is available for download by citizens, businesses and other interested parties.

The updated website includes the following information:

  • Budget message (the transmittal the accompanies the presentation of the preliminary budget)
  • Overview Presentation to Council (given 10/7 by Henry Holling)
  • Revenue Presentation to Council (given 10/7 by Jim Scroggins)
  • Budget tables for the operating, debt service and Community Investment Plan portions of the budget
  • Budget calendar

In addition, the entire preliminary budget packet for each department has been placed on-line. This is normally a document of over 400 pages, but has been broken into individual files by department.

The Peoria City Council is committed to gathering citizen input on the upcoming budget. In addition to the recently released “Report on Citizen Budget Input” (also available on the website), citizens are invited to address Council at any budget meeting. Upcoming meetings include:

  • October14—Regular Council Meeting (City Hall, 6:15 pm): Community Investment Plan (CIP) budget
  • October 21—Special Council Meeting (City Hall, 5 6:15 pm): CIP budget, operating budget
  • October 28—Regular Council Meeting (City Hall, 6:15 pm): Operating budget
City Council, City of Peoria

Next council meeting will focus on budget

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The agenda for Tuesday night’s Peoria City Council meeting is short — just two items. But don’t let that fool you into thinking it will be a short meeting.

It’s that time of year when the council starts discussing the dreaded budget. In keeping with the council’s desire to include more meaningful input from citizens, Tuesday’s meeting will offer residents a chance to comment on the budget after some pertinent information is presented:

A. REVIEW of CURRENT OUTSTANDING CAPITAL PROJECTS;
B. PRESENTATION OF OVERALL VISION/MISSION/CORE FUNCTIONS;
C. REVENUE REVIEW;
D. PUBLIC COMMENT Relating to the 2009 CITY BUDGET.

If you’re looking for information on the city’s budget, look no further than peoriabudget.com. City staff has assembled a number of helpful charts and graphs to give you a picture (literally) of the city’s revenue and expenditures, broken down a number of different ways. Here are a couple that will be germane to Tuesday’s meeting (click on the thumbnail to see the full graph):

These two graphs show the revenue sources for the city. They’ll come in handy when it comes time figure out how we’re going to raise more revenue for the city’s needs.