The village of Brookfield is looking to creatively address cash-flow problems that have in the past year made it difficult at times to pay its bills.
Reductions in state shared taxes, lower-than-anticipated real estate tax revenues and increasing police and fire pension obligations all combined to contribute to a general operating deficit of roughly $446,000 last year, according to a preliminary draft of the village’s 2017 audit report.
A $600,000 transfer into the general operating fund from the Motor Fuel Tax Fund converted that deficit into a slight surplus, but the financial pressures on the village from a cash-flow standpoint remain a concern.
In the face of a predicted $277,000 general operating deficit (the village plans another $600,000 transfer in from the MFT Fund) for fiscal year 2018, village officials are expected to look at raising fees for things like vehicle stickers, liquor licenses and ambulance services, reviewing water and sewer rates and establishing a line of credit to help pay bills when cash on hand is short.
During a presentation of the village’s financial position at the village board’s committee of the whole meeting on June 11, Finance Director Doug Cooper also said some might wonder why the village wouldn’t dip into the special cash reserve fund, created in 2008 during the national recession as a “rainy-day” fund to respond to extraordinary circumstances.
That fund has $1.7 million in it, but Cooper recommended against dipping into it at this time.
“My concern is, once you open that door, you might want to do it again and again, because it’s an easy solution to a tough problem,” Cooper said.
A draft version of an ordinance contemplates establishing a $2 million line of credit with First National Bank of Brookfield essentially as a cash-flow insurance policy.
The village has a couple of expensive infrastructure projects in the works – the 2018 street-improvement program and streetscape and train station improvements at the Prairie Avenue grade crossing.
It may take months for the West Suburban Mass Transit District to reimburse the village for the streetscape and station costs, and the village won’t issue bonds for the ongoing street-improvement program until early August, so the village likely will need the line of credit to pay for construction expenses until the grant and bond funds are available. The line of credit can be paid off at that time.
Village trustees are poised to pass an ordinance establishing the line of credit at their next business meeting on June 25.
“It’s a safeguard,” Cooper said of the line of credit. “It’s there in case we need it.”
In 2017, the village experienced a significant shortfall in estimated property tax revenues, to the tune of roughly $800,000. Cooper took the blame for the missed estimate, saying a new tax levy for debt service had been double booked as revenue in the budget.
The village’s share of state income tax revenue and non-home rule sales tax receipts came in a combined $110,000 under budget due to the state of Illinois cutting municipalities’ share of the income taxes and imposing a handling charge on sales tax reimbursements.
Brookfield, like most small municipalities around the state, also is seeing more of its annual tax levy being shifted from general operations to paying police and fire pension obligations.
Between 2012 and 2016, according to Cooper, the village’s combined police and fire pension obligation has increased by roughly $1 million – money that has been diverted from funding general operations. In 2019, Cooper said he expects the pension burden to increase another $75,000.
But the village was able to soften the blow to revenues by cutting budgeted expenditures by about $921,000. The largest cut to spending was delaying large capital expenditures planned for 2017.
Despite the general operating fund technically coming in at a surplus in 2017, the village’s general operating fund balance took a roughly $350,000 hit. That reduction, said Cooper, was related to state shared taxes that the village had on its books as a receivable, but had to cancel in the face of the state’s cuts to those funds.