Proposed budget makes big change on riverboat fund
By Ted Schnell • BocaJump | Nov. 12, 2011
New taxes, new fees and even tinkering with Elgin’s tax rate likely will be tough, contentious issues with which the City Council will grapple in the coming six weeks, but it was apparent Friday that nearly $1 million in cuts to social services funding won’t be taken lightly either.
Some members of the council visibly were taken aback at the city administration’s proposal to transfer from the riverboat fund $2 million — used this year to assist area social service groups, provide a tax rebate, replace city vehicles, among others — into the general fund to offset some of the city’s revenue losses.
That move immediately creates two dilemmas for the council — the most obvious being about $1 million in cuts to social services agencies that already say they are struggling as a result of the Great Recession of 2008, which likewise is hobbling the city financially. But the proposed transfer of riverboat funds to the general fund is in direct contradiction of a longstanding policy the City Council set for those revenues soon after the Grand Victoria Casino opened in October 1994.
The fund is replenished by monies the city collects from leasing land to the Grand Victoria, from the $1 admission tax on casino patrons and from gaming revenue taxes. To date, the City Council has avoided using those funds for general fund expenditures such as payroll. Instead, the city has used them generally for capital projects such as street and sewer improvements, to provide the city’s share of matching funds for state and federal grants secured for capital projects, to replace city vehicles, and to assist social service agencies and provide a property tax rebate to Elgin’s older property owners.
In 2008, $26.8 million came into that fund. But the economy and other factors, the most recent being the opening of a new casino in Des Plaines, have taken a toll. The city estimates those revenues will total only $14.14 million in 2012.
Also a victim of the city’s declining revenues is the senior citizens property tax rebate. The program was placed on hold midway through this year because it appeared riverboat revenues would hit a circuit breaker of sorts that the city had built into the ordinance that estblished the program: The rebates would discontinue if riverboat revenues fell below $13.75 million. The program is budgeted to disburse $825,000 in 2011.
Important update | The administration’s proposed budget does include one, much smaller provision for social service agencies: It sets aside $150,000 to supplement the federal Community Development Block Grant funding the city receives and that those agencies have applied for in the past. During Friday’s meeting, officials explained the $150,000 could be sought to cover agencies’ operational, since Community Development Block Grant have limits on such use. Another factor: More social service agencies would be able to compete for that much smaller portion of city funding.
But there are other cuts to the riverboat fund as well. The city budgeted $500,000 in vehicle replacements using riverboat revenues in 2011. That would be suspended in 2012. Historic grant programs, which received $200,000 this year, would require alternative funding to continue in 2012.
In addition, the city would eliminate nearly $58,000 in funding for two programs offered in cooperation with Pace. The city budgeted $42,000 this year for the Ride in Kane program, a low-cost ride service available to senior citizens and disabled residents. The second is Pace Route 554, which received $15,680 in riverboat funding this year. The route provides public transportation between Elgin and Woodfield.
When he presented his overview of 2012 finances to the City Council on Friday afternoon, City Manager Sean Stegall explained the proposed budget, one of three options he offered, requires departures from past practice and policy simply because of the severity of the city’s revenue loss in recent years. The proposed 2012 budget represents a 5 percent spending cut from last year, and a decline of 17 percent, or $55 million, since 2007. Part of the $4.8 million cut in spending as proposed in the 2012 budget is the $2 million for social services and the senior rebates. The remaining $2.8 million in cuts came directly from the general fund.
The revenue declines have created a structural deficit, which he attributes largely to Elgin’s reliance on only four of the 11 sources of revenue available to cities.
The social service agencies and other programs, and the monies they received, from the riverboat fund in 2011 include:
- Boys & Girls Club of Elgin — $100,000
- CCC-Toy Giveaway — $2,000
- Public Action to Deliver Shelter — $14,000
- Renz Addiction Center — $12,290
- Senior Services Associates — $7,500
- Elgin Community Network — $14,290
- Children’s Theatre — $7,500
- Elgin Symphony Orchestra — $63, 060
- Hamilton Wings — $9,380
- Pace Ride in Kane program — $42,000
- Pace Route 554 — $15,680
- Youth sports grants — $33,030
- Senior tax rebate — $825,000
- Historic grant programs — $200,000
- City vehicle replacement — $500,000
- Project completions from 2011 — $103,270
For more informationabout Elgin's proposed 2012 budget, click here.