Contract talks with all 5 unions new wrinkle in budget process
By Ted Schnell • BocaJump | Oct. 26, 2011
What city officials have called an unprecedented drop in Elgin’s projected revenues for 2012 has upended the apple cart, so to speak, in terms of initial preparations on the city budget for the new fiscal year.
While few would say the two months’ of work by the Elgin Budget Advisory Task Force was wasted, most would agree that last week’s announcement that the city’s deficit could balloon to as much as $13 million renders the panel’s efforts far short of what is needed to balance the budget. The task force began its efforts seeking to eliminate a structural deficit that had been projected at just $4.5 million.
Carl Missele, who chaired the task force, and Mayor David Kaptain have both said everything is on the table in terms of ideas for cuts, new fees, new taxes and even increases of existing ones.
Much remains to be done.
Yet the city faces a Dec. 23 deadline. That is when Chief Financial Officer Colleen Lavery said she has to turn in to Kane County the city’s budget for fiscal 2012, which begins Jan. 1.
Tonight, Oct, 26, City Manager Sean Stegall will update the City Council on the schedule city officials want to follow as they struggle to balance that budget and stave off the projected $10 million to $13 million structural deficit.
Assistant City Manager Rick Kozal said the City Council will be asked to meet on the budget at least several times in November to discuss the budget, in addition to the council meetings.
City officials had hoped the work of the Elgin Budget Advisory Task Force, which met in August and September, would offer much of the direction they sought in dealing with what initially was projected to be a $4.5 million structural budget deficit.
But property values in Kane County, which accounts for 80 percent of Elgin land, plummeted 20 percent this year, and will cut the city’s property tax revenues from $47.7 million this year to $38.3 million in 2012, assuming the city’s tax rate is not changed. Property taxes comprise about half the city’s general fund. Of the $47.7 million the city levied in property taxes this year, $33.2 million was for the general fund, with the remainder going toward the city’s bond debt and for its pension funds.
The task force, whose objective was to gauge residents’ support for service reductions and revenue enhancements, has recommended $2.4 million in cuts and advised the City Council to review payroll costs. The task force also advised the council to consider new taxes, new fees or increases of existing revenue sources only as a last resort.
Potential complications in the wings
Another wrinkle the City Council and administration face that potentially will affect the budget will be coming into play soon as well.
The contracts for all five unions representing city employees expire at the end of the year. That means contract negotiations will start soon, and that potentially could affect payroll costs, which account for 76 percent of Elgin’s general fund.
Elgin Corporation Counsel Bill Cogley explained to the budget task force in September the potential impact negotiations could have on the city budget, particularly if negotiations end up going into arbitration.
Specifically, he said the budget negotiations likely will not conclude before the budget is adopted, which creates its own complication. If negotiations hit a snag and go into arbitration, the city could face a potentially costly ruling — although that also could work against the union.
But a ruling against the city essentially would require some budget reshuffling, which gets more complicated when negotiations go long or enter into arbitration.Kozal said Monday that there are five unions representing Elgin employees — one for police, another for firefighters, one of service employees, another for clerical/technical workers, and one for public works employees.