Task force recommendations head to City Council

By Ted Schnell • BocaJump

Elgin’s Budget Advisory Task Force finished up its work this week, sending off its recommendations to the City Council as it became clear that the $4.5 million deficit officials have been discussing likely will nearly double to $4.8 million in 2012.

The revelation was not entirely unexpected — recent media reports have noted that the area’s property values have declined sharply, which will have an impact on property tax revenues in the coming year. But just how sharply those revenues would drop had not been quantified to task force members, who asked Elgin Chief Financial Officer Colleen Lavery just how badly the change would affect the city.

Lavery said Elgin Township is projecting a 10 percent drop in revenues, but Kane County has not yet compiled its information. Elgin also receives property tax revenues from Rutland, Plato and Campton townships, which are located in Kane County.

Until she gets the precise figures from Kane County, Lavery told the task force, she is estimating a 12 percent drop in the city’s property tax revenues. That’s a loss of about $4.3 million, she said, pushing the total deficit to $4.8 million in 2012.

Some task force members were visibly stunned. Until this point, they had been considering recommendations to the City Council with an eye toward cutting half that amount.

Ultimately, the task recommended the City Council evaluate what it considers to be the essential level of services and consider employee pay and benefits for potential cuts; and that the council consider new fees or tax increases “only as a last resort.”

City Manager Sean Stegall, who lavished his praise and appreciate upon the task force for its work over the past two months, said after the meeting the staff will bring the task force recommendations to the council with the proposed 2012 budget, probably later this month.

A river of information

Tuesday’s meeting opened with the task force wading through a virtual river of information pertaining to what the city pays its employees and the benefits they receive. That alone is a complicated task because there are several unions involved representing police, firefighters, public works and clerical employees, but the nonunion city employees generally referred to as management.

The city staff provided, as the task force had requested at an earlier meeting, a comparison of Elgin’s municipal employee pay and benefits with those of comparable communities — such as Arlington Heights or Waukegan. And city staff said the data indicated Elgin’s pay/benefits levels were comparable to similar cities.

But the evaluation lacked depth, largely because of the limited time city staffers had to gather the information, which task force members acknowledged. Even so, member Patricia Segel said the evaluation lacked the type of data — such as job descriptions — to allow for an “apples-to-apples” comparison of employees and their pay and benefits in Elgin with those of the other comparable communities.

Task force member Keith Rauschenberger also expressed dissatisfaction with the data, saying he believes there needs to be a comparison of pay and benefits with private sector employees.

He explained that the city should be considering the same kinds of cuts that are done in the private sector, where companies often cut salaries and benefits, as well as personnel when the economy slows and pinches finances

But perhaps one of the greater issues the task force discussed was related to rising health care coverage. The city’s share of those costs are increasing, even as employees shoulder a greater share of that cost each year, Lavery said.

Overtime also continues to tax city finances, officials said.

Ultimately, however, the task force had limited time. Tom Sandor, a task force member and former Elgin councilman, was among the first to suggest the task force could make no meaningful recommendations to the council in regard to employee pay and benefits.

“The question is, ‘Can we really afford this level of service?’ ” Sandor said, noting that question needs to be considered for every city service, from police and fire protection to public works, before decisions are made to cut pay, benefits and positions, or raise fees.

Also coming into play are contract negotiations. Elgin Corporation Counsel Bill Cogley explained the process of negotiations and how some parts, such as arbitration, can pose a risk to the city in terms of control over expenses.

Talking taxes, fees

The revelation of the nearly doubled deficit came as the task force considered a list of potential new revenue sources for the city, which ranged from bringing back vehicle stickers to a utility tax, a gasoline tax, a fee for refuse collection, a food and beverage tax, a real estate transfer tax.

Some options are more attractive than others. Charging residents for trash removal ($12.87 a month per single-family home or $9.35 a month for townhomes) would general $4.4 million alone.

But task force members expressed reluctance to recommend any new fee, new tax or tax increase. There was even reluctance to consider a proposal by Rauschenberger to stave off the loss of property tax revenue by allowing the tax rate to float up as property values drop, or drop as property values rise. As he proposed it, such a move would be revenue/tax neutral by raising the tax rate as property values decline, but only to the point that the property own would pay the same amount in taxes as the year prior.

Rauschenberger himself point to the city’s 12 percent unemployment rate as he explained the city at some point must look to other sources of revenue to diversify its funding sources away from relying so heavily on property taxes.

One by one, task force members shared their concerns — or simply voiced agreement with as they spoke — that the did not feel they could make a commendation on taxes or fees, except to warn the council to do so “only as a last resort.”