City of Rock Island City Council met Dec. 9.
Here is the minutes provided by the council:
Present: Mayor Mike Thoms, Alderwoman Jenni Swanson, Alderman Dylan Parker, Alderman Mark Poulos,
Alderman Dave Geenen, and Alderman Randy Hurt.
Alderman James Spurgetis arrived at 5:10 p.m.
Absent: Alderman Ivory D. Clark
Staff: City Manager Randy Tweet, City Attorney Dave Morrison, City Clerk Judith Gilbert, and other City staff
FINANCE: CY 2020 PROPOSED BUDGET OVERVIEW
Stephanie Masson, Finance Director, presented information on the proposed CY 2020 budget to the Council, noting the focus of the Council meeting would likely be the proposed tax increase.
She explained that Article 18, Chapter 35, Section 200 of the Illinois Compiled Statutes provides the framework for the levy and extension process. Ms. Masson noted that since the tax levy is over 5%, the City is holding a public hearing. She explained her presentation would review the total budgeted expenditures and revenues of the City, as well as the goals that the City followed to arrive at the proposed budget. She explained that the presentation will also cover the General Fund, the Parks Fund, and the Library Fund, as they are partially funded by the proposed property lax levy.
Ms. Masson started with a review of what the goals were in determining the CY 2020 budget.
She explained that the first directive in the budget process is to prepare a balanced budget, which generally means that revenues exceed expenditures. She explained that some funds have challenges, but it is always the City's goal to minimize the impacts, but also to provide the funds to provide services to the citizens and business community and be fiscally responsible. She reminded the Council that the budget policies were reviewed at the November 25th meeting.
Ms. Masson stated that the proposed expenditure budget for all City funds was $122,046,571.
She showed a pie chart of how the expenditures were spread across nine departments and over 40 active funds. She said the General Fund was the largest portion of this with $38.5 million, followed by the Water, Sewer, Storm, and Refuse funds, or Utility funds, combining for $26.1 million. She continued around the chart by showing the Economic Development fund at $8.6 million, which includes 7 active TIF districts along with CDBG funds, and the all other sections, which includes the Marina, Martin Luther King Center, Gaming funds, and internal service funds, which all add up to $122 million. The largest portion of the expenditures per Ms. Masson are personnel costs, which amount to 42.8%, or $52 million, which are up 2.6% from last year due to multiple factors, including wage and pension fund increases.
Ms. Masson explained how the City offset the increases in expenditures, including the elimination of positions, delaying the filling of vacancies, and continuing the restructuring of Parks, Fire, Human Resources, and Finance departments. She also explained that Services account for $26.3 million, and that Transfers and Debt Service account for about 9%.
Ms. Masson discussed the City's expected revenues of $112,093,582. Charges for utility services are the largest portion of that revenue at $27.5 million. The next largest portion of revenues is the "other" category, which includes the internal service funds and fiduciary funds.
She explained that fiduciary funds are police and fire funds, which are not available to spend for citizens. She explained that property taxes are the next largest segment, which includes the proposed increase, and because revenue is less than expenses, they try to offset the deficit with reserves and modified cash accounting.
Ms. Masson discussed the General Fund budget, and the challenges of flat revenues with the outpacing of costs. She stated that Finance has issued guidelines to the department directors regarding the maintenance of budget expenditures. She addressed the obstacles to balancing the budget, including the cost of pension funds determined by the actuary, the concern of impacting services, and state mandates. She stated that 70% of overall operating costs were personnel, which is common for municipalities, health care costs and collective bargaining, as well as IMRF and pension contribution increases.
Ms. Masson noted possible solutions for budget challenges. These include expenditure reductions, revenue increases, new revenues, the use of reserves, and the reduction of staff. The plan is to reduce as much as possible without sacrificing services. The General Fund revenues are budgeted at $38.6 million, but expenditures are at $38.6 million, the largest of these being personnel. Ms. Masson noted other General Fund expenditures as Police, Fire, Public Works, and Services. Alderman Parker asked if the Parks and Recreation department was a General Fund or Enterprise Fund expenditure. Ms. Masson replied that property taxes, donations, and fees make up that department's fund of $6.39 million, which includes the golf courses, RIFAC, and Whitewater Junction. She mentioned that the Library is a Governmental Fund, mostly supported by property taxes and some fees.
Ms. Masson presented the allocation of property taxes as proposed, with a $981,000 total increase, the largest of which would go to Police and Fire pensions, which could be higher or lower depending on valuations. She gave a short history of the property tax rate and the EAV, or Equalized Assessed Value. Alderman Spurgetis asked about the history of the EAV and whether or not it has ever been higher. Ms. Masson replied that it is not likely, but she would check the records.
Ms. Masson moved on to the history of the City's property tax levy. They have recently shrunk the portion that has gone to the General Fund for a number of years, almost to the point of zero, and in 2011 through 2014, the Library and Parks and Recreation received nothing from the General Fund.
Ms. Masson noted the concerns from residents on the proposed property tax. She reminded residents that the proposed tax levy is one portion of their property tax bill, and gave an example. She discussed overlapping tax districts with regards to property tax bills, which include the county, the township, the school district, the college, the airport, and the transit authority, which all establish their own levy. She explained that the largest portion of the tax bill is the school district. She finished with another example of how the property tax is broken down, with a $48 increase on a house valued at $100,000. She understood that the impact to every home is important.
Ms. Masson concluded that a mix of solutions were used to present a balanced budget, including staff cuts, new revenues, expense reductions, and use of reserves to maintain a high level of service, which is difficult. If supported, it allows the City to maintain an appropriate level of reserves.
Mayor Thoms asked if the Council had any questions on the budget presentation. Alderman Parker asked Ms. Masson if she had information regarding the spending per capita, or how many dollars the City spends per capita. She responded that the number was $3,128.
Alderwoman Swanson then explained that she was not in favor of an increase in taxes, but recognized they may be needed to preserve services, to which Mayor Thoms agreed. Mayor Thoms commended Council for challenging staff to find cuts where they could. Alderman Poulos reflected on the one-on-one conversations he had with Council to find cuts. City Manager Randy Tweet agreed that everyone involved had worked hard to come to a budget conclusion. Mayor Thoms then commended Ms. Masson for her work on the budget, making it easy to understand.
Mayor Thoms then broke for public comment.
FURTHER COUNCIL DISCUSSION
Mr. Tweet encouraged Council to speak up regarding the budget issues. Alderman Spurgetis reminded residents about the proposed taxes, and suggested that the responsible proposal for an increase would be less than 5%. Mr. Tweet reminded Council that the lower rate of 3.9% was proposed in October, and the result of that meeting was the current proposal. Alderman Hurt reminded the residents that the departments had already cut $120,000 in a week by digging deeper. He recognized the concerns of the residents who spoke, but commended Council and staff for working hard to cut where they could.
Alderwoman Swanson stated that her initial reaction to the first proposal of a 3.9% increase was that it was already high, and that she was shocked to hear of the possible 6.7% increase. She reminded the residents about the $500,000 needed to fix the roads based on the public's request. She detailed her meeting with Mr. Tweet regarding Capital Improvement Projects to see if any of them could be delayed to help the CY 2020 budget. Mayor Thoms discussed the concern of using City reserves to cover standard services, and cautioned cuts in major areas.
Mr. Tweet asked Ms. Masson to speak more on the General Fund reserves. She stated that it was currently planned to have a deficit of roughly $300,000 for 2020 with the proposed property tax increase. She reminded Council that the 2019 budget used $770,000 in reserves. She discussed options that have been presented to additionally cut costs to the 2020 budget, and stated that if more from the reserves was used, the General Fund deficit would be $734,000.
Alderman Spurgetis asked what the General Fund deficit would be if the property tax was just under 5%. Ms. Masson stated that she could have that ready for the next Council meeting, and
Mr. Tweet interjected that instead the deficit would be worth five days of reserves, or around $500,000 instead.
Alderman Parker asked where the reserves were held. Ms. Masson responded that there was a mix of liquid cash at American Bank, a cash pool shared across the state of Illinois, IMA cash, a series of bank CDs, and a portfolio of US Agencies and Territories. Alderman Parker asked what might happen if the country sustained another recession or depression. Ms. Masson replied that the biggest impact would be felt in pensions and the Parks and Library funds. Alderman Parker discussed his concern regarding the use of reserves, and if Council could agree to bring property taxes below 5%, he would be for that.
Alderman Parker commended Council for their efforts in reducing or amending the 2020 budget. He discussed his proposals, including different approaches to use his original street fund proposal from the General Fund, perhaps by halving it. He confirmed that he agreed with the 6.7% increase. He questioned that if taxes are not handled this year, will the City be prolonging the need for the same issue to be handled in the following year. He asked about the City's hydroelectric plant and what the cost might be to delay the project. Mr. Tweet explained that the plant is a separate fund that has no money put into it right now, but a study session was coming to see what Council would like to do with it. Alderman Spurgetis stated that he was still investigating the plant, and his understanding was that the funds for that came from Public Works. Mr. Tweet clarified that a session was coming next month regarding the plant.
Alderman Parker asked to consider Council benefits, and proposed coming up with a motion to phase benefits out or eliminate them in order to help get the tax rate down further. Ms. Masson stated that only one Council member was currently using the IMRF benefit, and that other expenses from Council came from health care. She reminded Council that consideration of that option is something for the future, as the open enrollment period has already ended for the next year.
Mayor Thoms requested opinions from each Council member regarding what their preferred tax rate would be. Alderman Poulos stated 4.5-5%, Alderman Geenen stated that if Council finds that 6% is too high, then perhaps they could find a medium. Alderman Hurt stated that he did not have an opinion, but asked Ms. Masson about the 2% variance in the Parks and Recreation and Library fund, and if a reduction would make a difference. Ms. Masson replied that it would be a reduction of about $40,000. Alderwoman Swanson discussed her own experience when determining her opinion regarding the proposed tax rate, and stated that a small tax increase is more palatable.
Mayor Thoms reminded Council that the budget is not money spent. Alderman Spurgetis added that there were projects coming through that may assist revenue, and that the tax rate cannot be changed during the year; he preferred to have the rate lower than 5%. Alderwoman Swanson asked how many Council members would be in favor of 3.9%. Mr. Tweet then discussed the options presented versus the amount of City reserves. Alderman Geenen appreciated the transparent process involved in settling on the tax rate and budget. Mayor Thoms reminded Council that no vote would take place during study session. Alderman Spurgetis restated that he would support below 5%. Alderman Parker suggested that 3.9% may not be fiscally responsible. Alderman Poulos agreed with 4.5%, and stated that it represented space for a contingency, and less stress on staff members. Alderman Geenen agreed with that assessment. Alderwoman Swanson reinforced the originally proposed 3.9% rate suggested by staff, and stated that the budget was a fluid thing, and it can be changed based on needs.
PUBLIC QUESTIONS AND COMMENTS
Mayor Thoms announced that public comments would begin. He then noted that it was not usual to have public comments during a study session. RI Resident Jim Uribe came to the podium and had questions regarding the City's Enterprise and non-appropriated funds, and whether the revenues generated by them cover personnel and other areas. Mr. Tweet explained the Enterprise fund, and that the goal of it is that the money stays in the fund. Parks and Recreation Director John Gripp spoke and explained that the Enterprise fund covers the personnel costs and operational expenses, and went into how legacy funds are covered. Mayor Thoms and Mr. Gripp reminded Council and residents that the golf courses and RIFAC operate in the black. Mr. Uribe discussed various increases, and suggested "Lean Six Sigma" per his previous experience. He stated that the wages of some city employees were too high, and suggested that many residents have lost faith in the elected members. Alderman Hurt asked what the water and sewer increase was, and Mr. Tweet suggested that Mr. Uribe's combination of all increases may not be wholly accurate.
Mayor Thoms discussed the history of tax increases in the city, and reminded residents that there was an earnings cap for City employees. Alderman Spurgetis stated that the Council has been doing all they can to lower expenses and taxes since 2017. Alderman Poulos thanked Mr. Uribe for his confidence in Council to make the best decisions. Mr. Uribe stated that he would send his info on the proposed program to Mr. Tweet. Mayor Thoms concluded this portion by encouraging city residents to present additional ideas.
Resident Bill Long stepped to the podium and addressed Alderwoman Swanson concerning
increased costs from a tax levy on a fixed income. Alderwoman Swanson discussed what she has done to encourage budget cuts, including the potential for different trash pickup dates. Mr. Long detailed his thoughts on how to arrive at budget reductions because the residents were in desperate times, including the recruitment of lower quality staff to fill positions as well as other measures. Mr. Long asked how many City entities were included in the property tax measure, and requested that the proposal be on a public referendum instead.
Alderman Spurgetis replied to Mr. Long that he understands about fixed incomes. Mayor Thoms countered that the average selling price of homes in the city has gone up several years in a row, and that homes have spent less time on the market than in the past. He stated that more residents have moved to Illinois from Iowa than vice versa. He suggested focusing on spending money in Rock Island or in the Illinois Quad Cities, as it helps the City and helps the schools. He warned against cutting too much, as it could affect services to a larger detriment.
The study session concluded at 6:47 p.m.
https://www.rigov.org/AgendaCenter/ViewFile/Minutes/_12092019-501
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