A Weekly Note from Mayor Gary L. Graham
“Traditional Values, Progressive Thinking”
Back in November, the O’Fallon City Council held a Planning Session. During the session, there was considerable discussion on a wide variety of topics including the economy, revenue, taxes, and financial trends. The meeting was a brainstorming session and no votes were taken. It was an opportunity to present complex issues in an informal environment. Every issue discussed must be presented formally in a future committee meeting, and any new revenue options must be voted on in a City council meeting.
The City of O’Fallon has cut more than $2 million out of the budget over the last 18 months, including not filling 13 vacant positions. We have managed to maintain quality services despite the fact that we have 13 less employees and 4,000 new residents.
In addition to making spending cuts, City departments have achieved some significant savings and efficiencies: we cut almost 4,500 overtime hours resulting in approximately $135,000 in savings at the Wastewater Treatment Plant by modifying plant operations and rotating employee schedules; we found a way to purchase new police cars using drug forfeiture money, relieving the General Fund; we saved $17,000 on electrical efficiencies through rate negotiations with AmerenIP and through purchasing real-time electricity rates off the grid for the Wastewater Treatment Plant; and we estimate an extra $20,000 in interest income after moving the City’s investments to the Illinois Municipal Investment Trust (IMIT). We traditionally placed our short-term investments in the State Treasurer’s Illinois Funds Investment Pool, which is
currently offering 0.07% interest. In contrast, IMIT is offering 4.7%.
So far in the current budget year (May 1, 2009 – April 30, 2010), our sales tax revenue is down 7%, and our state income tax revenue is down 15%. In addition, the State is running one to three months behind in making payment to us. Our expenses are in line with revenue and our budget is balanced, but we face a budget next year that looks to be worse than the one we are in now.
We are less than a month away from beginning the budget process for fiscal year 2010-2011. We have cut expenses to the point where any more significant cuts will impact service levels and /or manpower. This was the reason for the Planning Session. Staff needs guidance from the City Council on their priorities for the next budget. Our budget is dependent on sales tax and state income tax, so we would like to diversity our revenue sources to stabilize the budget. If the City Council wants to maintain our current level of services, then additional revenue is needed. If not, then we need to make some difficult reductions.
There was a lot of discussion on revenue raising strategies that could relieve our budget shortfalls. The issue of property taxes was presented as an example of what could be generated if the City levied the maximum allowed by state law. Staff did not recommend adopting such an action, but rather it was to represent what the city Council was foregoing in potential revenue. The City Council decided many years ago not to use the property tax as a primary revenue source so the public schools could adequately fund their operations. As a result, only 11% of your property tax bill goes to the City of O’Fallon. The City Council and I are still committed to NOT raising the City property tax levy and keeping the City portion of your property taxes at a constant rate. In fact, the City Council
recently approved the property tax levy for 2010 and the City’s portion was reduced again for the 13th consecutive year.
We believe it is prudent to be proactive and discuss these difficult topics before our budget situation becomes too dire to do anything about it. Such open discussion on revenue and taxes is good management. This month the finance Department will prepare budget documents for the city departments. Departments will submit budget requests back to the Finance Department early next year and the City Council will approve the budget in April. Until then we do not know what the economy will do or how revenues will trend. Media reports indicate the economy may be recovering, which would be good news for our sales tax revenues. However, revenue trends to date are down dramatically and we must review all contingencies.
It is an honor to serve you, and I appreciate being given the opportunity to work for the residents of O’Fallon. I am willing to meet one on one with anyone who has a concern about any issues related to our city. I welcome your suggestions and comments and encourage you to contact me at 624-4500. It is through your input and dialog on important issues that we will make O’Fallon an even better place to live and work.
Happy holidays to you and your families. It is my prayer that 2010 will be a wonderful year for everyone!
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