After two months of tweaking, Riverside’s trustees passed the village’s 2011 budget, although the vote was not unanimous.

Trustees Jean Sussman and Ben Sells voted against the budget, while trustees James Reynolds, Lonnie Sacchi and John Scully, along with the Village President Michael Gorman, voted for its passage.

While none of the trustees objected to the fact that the village was passing its second straight deficit budget – expenditures are expected to outpace revenues in 2011 by $251,474 – Sells and Sussman objected to what they described as the incomplete picture the budget document paints.

“I agree we have to spend unassigned reserves,” said Sells in an interview last week, “but I’m not going to give the impression that we have money that we don’t have.”

Sells was referring specifically to a decision made by a majority of the board, the same night they passed the budget. Prior to its passage, the board voted 4 to 3 (with Gorman, Shevitz, Sacchi and Reynolds voting together) to reject Sells’ resolution that deferred capital and pension expenditures should be noted in the budget and in the village’s annual financial audit.

“My concern is that we give as clear an idea as possible to the residents about what our unassigned reserve balance is,” Sells said during a discussion of the issue on Dec. 20. “These are items we’ve chosen to fund and have chosen to defer.”

Sells argued that by the end of 2011 the village will have racked up more than $630,000 in deferred expenses, ones he said the village board had approved and will come due at some point, whether in the form of vehicle or computer equipment replacement or pension payments.

Under the current budgeting mechanism, with deferred expenditures excluded from the equation, by 2013 there will be $15,000 in unassigned reserves available for use. However, if deferred expenses are taken into account, Sells said, that number is actually in the red by $682,717.

“That’s my point. I think it’s really important that as we go through the using of these unassigned reserves, we keep an accurate count, and to do that we need to account for the items we are deferring.”

Sacchi, however, argued that money deferred is, in a true sense, money not spent. In order to maintain the maximum flexibility for cash on hand, Sacchi argued, it shouldn’t be sequestered and counted as a loss.

“In a perfect world we’d fund all of our policy initiatives,” Sacchi said. “As things unfold, sometimes you don’t. … My direction has always been to maximize the unassigned reserve to preserve maximum flexibility for the board. If you assign it to a certain savings account, such as a vehicle replacement fund, I think it diminishes the ability.”

Shevitz expanded on Sells’ argument, saying if he wanted to include deferred expenses in the budget document, then it should also include the village’s police pension fund, which is also funded at far less than 100 percent and represents millions of dollars.

“If we’re going to be talking about deferred obligations, let’s talk about that, too,” Shevitz said.

Sussman responded that the vehicle replacement policy was reaffirmed by the board and said the board should either follow its policies or change them.

“If we’re going to change the vehicle rotation policy then let’s change it, but this is the policy we have right now,” Sussman said. “Let’s be open and honest about really what we’ve committed to doing. Let’s not make the bottom line look bigger than it really is.”

Change in capital funding policy

Separately on Dec. 20, the village board changed a policy on the books since 2008 and amended in 2010, that would have transferred all unassigned reserve funds into the capital projects fund by the end of 2011.

The policy was implemented initially to ensure future funding for capital projects, since there is no separate revenue stream for those kinds of projects. At the beginning of 2011, the village had about $830,000 in its capital project fund, most of that resulting from the transfer of $1 million from the general operating fund to the capital fund in 2007.

By 2015, the capital fund is predicted to be completely depleted.

While trustees generally agreed that the entire unassigned operating reserve shouldn’t be funneled to the capital fund by the end of 2011, Sells and Sussman argued that it was vital to keep injecting some money into the capital fund.

“We should be making some attempt to fund expenses that we know are coming and are coming soon,” Sells said.

2011 budget highlights

The Riverside village board passed its 2011 budget on Dec. 20, 2010, anticipating having to draw down on the village’s general operating reserve by $251,474. That number has grown a bit from the board’s initial discussion of the budget back in October because trustees have reconsidered a few cuts and have tweaked others.

Here’s a rundown of what’s in and what’s out of the 2010 budget:

  • The board won’t make a scheduled $253,873 contribution from general fund to the vehicle replacement fund.
  • The board won’t spend $70,000 for cyclic tree trimming.
  • Non-union employee pay freeze.
  • No merit raises for non-union employees, but no furlough days either.
  • $64,711 approved for hiring a 19th police officer.
  • No employees will be eliminated in the Public Works Department.
  • $40,000 included in the budget for hiring an economic development director.