As the 2008 economic recession faded into the background in recent years, there was a sense that the end result at the municipal level would be some sort of relief. But as the past 18 months have shown, that really hasn’t been the case.
All three of the villages covered by the Landmark saw unexpected budget shortfalls when 2017 was all said and done. North Riverside saw revenues in its 2017-18 fiscal year fall almost a half million dollars short of expenditures, while Riverside finished with a $230,000 hole.
Brookfield’s 2017-18 financial picture became a little clearer Monday night during a discussion of the upcoming audit report, something we’ll report more on next week. The verdict is not rosy: Before fund transfers, general operating expenditures outpaced revenues by about $450,000.
The village’s finance director admitted that cash flow is a problem and the village at times struggles to pay its vendors. Staff is recommending some solutions to that problem, including establishing a revolving line of credit to pay for bills during lean times, something Brookfield did right after the recession first hit in 2008.
Why is this happening now?
A few things account for it, both unsurprisingly tied to the state of Illinois.
First, in 2017, as a way to ease their own budget crunch, the state’s General Assembly cut the amount of income tax revenue it is supposed to reimburse to municipalities by 10 percent. In addition, the state imposed a 2 percent “handling charge” for processing non-home rule sales tax reimbursements to villages that have such taxes — like Riverside, Brookfield and North Riverside.
Between the two actions, each village lost, easily, $100,000 in revenue, which they were expecting to fund operations.
The General Assembly recently decided to continue both clawbacks in its most recent budget, though it lowered the income tax takeback to 5 percent and the sales tax handling charge to 1.5 percent.
And then there’s the issue of police and fire pensions, which the state still is mandating all municipalities fund at 100 percent by 2033. It’s a fantasy that will bankrupt towns all over the state if the policy isn’t modified.
All of the three villages covered by the Landmark have seen their police and fire pension obligations skyrocket in the past decade, all to the detriment of the village’s general operations funding.
Money that used to fund public works, police protection and fire protection has been shifted away to fund pensions. So if taxpayers are seeing their tax bills go up and village services tread water, that’s a good part of the reason.
Between 2012 and 2016, for example, Brookfield shifted $1 million of its annual tax levy from operations to pensions. When the state then claws back additional money critical for municipal operations, it’s a bitter pill.
While local governments will continue to find ways to lower costs and streamline operations, the state has got to step up and relieve the burden that pensions are imposing on municipalities.
The current model is just not sustainable.