Brookfield’s village manager has recommended imposing a series of initiatives — from imposing a local tax on food and drink purchases at restaurants and bars to raising fees on vehicle stickers, parking tickets, liquor licenses, business licenses and ambulance fees – in order to solve a “structural imbalance” that led to a large budget shortfall in 2018 and will lead to another in 2019 if it’s not addressed.
Village Manager Timothy Wiberg outlined the village’s financial picture during a three-and-a-half hour budget workshop with elected officials on Jan. 17.
“We’re in structural imbalance right now and that’s one of the red flags that we’re unfortunately here to share,” Wiberg told the village board. “That’s the bad news. The good news is I think we can deal with it.”
A main takeaway from Wiberg’s presentation was that the village has been balancing its budget in recent years by making a large transfer annually – between $400,000 and $600,000 — from its motor fuel tax (MFT) fund to its general operations.
The village has been using that money to pay for things related to roads, such as salaries for public works personnel related to street maintenance, road salt and the like. While that’s allowable under state law, it’s not an ideal use of those funds, said Wiberg, and was serving to mask a financial problem.
“It not a crisis by any stretch of the imagination,” Wiberg told the village board. “We are balancing our budgets, but we can’t keep doing this year after year after year. Eventually the deficit will become too great for what we get out of MFT.”
Ideally, said Wiberg, the village would use MFT funds for capital improvements, such as street replacement, replacing street lights and so on. In the past, the village has done just that, using MFT funds to serve as a local match for grant funded street resurfacing projects.
Since 2014, however, making the MFT transfer into the general operating fund has been the solution to balance what otherwise would have been deficit budgets.
While that strategy has been able to mask the structural imbalance, the veil dropped in 2018 when, even after a $600,000 transfer from the MFT fund to the general operating fund, the village’s budget ended 2018 at a deficit of $566,000.
In 2019, that trend is expected to continue without additional revenue, said Wiberg. According to a summary of preliminary 2019 budget numbers, general operating expenditures are expected to outpace revenues by about $902,000.
While it might not be possible to forego some sort of transfer from the MFT fund to the general fund to close that gap, Wiberg said he wanted this year to start weaning the village from its practice of making that MFT transfer.
“I want to reverse the trend,” he said.
One of the principal causes of the financial imbalance, said Wiberg, was the ever increasing burden of police and fire pensions.
The 2019 preliminary budget indicates the village will pay a little more than $3.3 million to meet its police and fire pension obligations. That obligation has skyrocketed by $1.3 million — 64 percent — since 2015.
“It’s primarily a product of pensions,” Wiberg told the Landmark in a phone interview following the Jan. 17 workshop. “That’s the ticking time bomb.”
Property taxes fund roughly half the cost of village operations, and the number of tax dollars being used to fund village services is dropping, because more and more dollars are being earmarked to pay pension obligations.
To help meet those challenges, Wiberg outlined a variety of measures designed to increase general operating revenues on an ongoing basis.
By imposing a 1-percent places-of-eating tax on sales at restaurants and bars, Wiberg estimated that the village could raise $200,000 annually. With the Brookfield Zoo serving as Brookfield’s largest sales tax generating business, their contribution via a places-of-eating tax would be about $50,000 to $60,000.
Both Riverside, North Riverside and Countryside have already implemented such taxes, said Wiberg, leading him to conclude that such a tax in Brookfield would not leave local restaurateurs at a competitive disadvantage.
Wiberg said that he would meet with the Brookfield Chamber of Commerce and restaurant and bar owners to explain the need for the tax.
Raising vehicle stickers on passenger cars by $10 would net the village another $100,000, said Wiberg, while adjustments to liquor and business license fees could net another $77,000.
Wiberg also suggested raising another $120,000 by increasing parking ticket fines from $35 to $50. The village might also net another $100,000 by increasing its ambulance fee from $1,000 to $1,400. The village’s policy of only seeking insurance reimbursement from residents who require paramedic services would not change.
One other way to increase revenue assumptions, Wiberg, said would be to adjust how the village estimates its return on pension investments. Currently, the village estimates a 6.74-percent return. By raising that assumption by a quarter point, Wiberg said, the village could pencil in $200,000 more in revenue for the general operating fund.
“All of this goes to the operations of our village. … This is how the village is funded,” Village President Kit Ketchmark said to trustees regarding the revenue recommendations. “If we don’t do that, then what else do we do?”
Village trustees are slated to discuss some of the revenue initiatives, such as vehicle stickers, liquor license fees and pension assumptions a bit more at upcoming board meetings. The next one is Jan. 28 at 6:30 p.m. at the village hall, 8820 Brookfield Ave.
Wiberg said his goal was to have a final budget ready for passage by the village board by the end of February.
This article has been changed to correct the date of the Brookfield Village Board’s next meeting.