By Ted Schnell • BocaJump
The Elgin City Council on Wednesday approved three-year, $70,175 study of the city’s user fees to determine whether the money those fees generate actually covers the cost of services.
That is a growing concern at a time when the city is looking to fill a $4.5 million budget gap that could mushroom if Gov. Quinn follows through on a threat to withhold municipal revenues unless the General Assembly allows the state to borrow more money.
The council on Wednesday voted 6-0 to enter into an agreement with TischlerBise to conduct the study.
Colleen Lavery, Elgin’s chief financial officer, said the city would be able to use the study’s data as it comes in to adjust future budgets – probably beginning with deliberations next year for the 2013 budget – assuming the study recommends changes to fees. She added that the study could recommend fees be increased or that they be decreased to reflect the actual costs of services.
The first year of the cost-of-service analysis would focus on “quality of life” services – specifically, the fees collected from the Elgin’s recreation and golf funds, Lavery said.
Those funds would pay for the $17,575 cost of the first leg of the study.
“This time we are going to focus on Parks and Recreation … and let the City Council know what our actual fees received are and what it costs us, so they’re aware of what we’re basically subsidizing in the city of Elgin,” Lavery said.
Lavery said the next two years of the study would be more all-encompassing, looking into all the fees that bring cash into the general fund.
According to the staff documentation of the proposed study, the $23,575 second-year portion of the study will consider fees related to the police and fire departments, Public Works, cemetery fees, the City Clerk’s Office and liquor license fees.
The final, $29,025 of the study will review fees pertaining to human resources, the Community Development Department, engineering, the Health Department, and business licenses.
Lavery said the city had considered a cost-of-service analysis 18 months ago, because the last time it had done such a review was in 2002. But the cost of the analysis was cost-prohibitive and the study was delayed.
In the meantime, she said, the city sought another round of requests for proposals on the study, but this time breaking it into three parts, to be done a year at a time and spreading the cost out over that period.
The city budgeted for the study beginning this year, and Lavery said it would be quite comprehensive. The study looks at such things as man hours and materials, as well as indirect costs, to determine the true cost of providing a given service.
Typically, according to staff documentation, user fees are linked directly to the cost of providing the service. But the 2002 study failed to include discussion on policy recommendations to establish subsidies for fees, where applicable. While fees associated with community services commonly are set to recover the full costs, fees associated with quality of life and regulatory and administrative fees typically have a subsidy built into the fee structure, according to staff documentation. With the significant change in the economic climate, staff is proposing an updated cost-of-service analysis that will identify the appropriate level of subsidy for each fee, where applicable.
The second phase of the analysis will provide a fee survey to ascertain the reasonableness of chargeable fees, current or newly recommended, and how they compare to other communities in the area, including Evanston, Des Plaines, Aurora, Hoffman Estates, Naperville, Arlington Heights, West Dundee, St. Charles, Streamwood, Glen Ellyn, and Carpentersville.
The third and final phase of the analysis is a recommendation for the proper allocation of charges to the various city funds and a policy recommendation for subsidies if and when appropriate.
