The shutdown of many retailers, bars and sit-down dining, video gambling parlors, theaters and other entertainment-related businesses is expected to have a devastating effect on revenue streams critical for funding the operation of North Riverside village government.
While Village Administrator Sue Scarpiniti told the Landmark she did not expect the village to experience her worst-case calculations, she indicated in letters sent at the end of April to union employees seeking short-term wage concessions that revenue losses of “more than $400,000 monthly” were projected.
Figures shared with the Landmark showed the worst-case scenario of monthly revenue losses at $685,000 if the current stay-at-home order remains in place for an extended period of time.
“These estimates are continually being updated as the village receives more information from information from the state and our local businesses,” Scarpiniti said in an email to the Landmark. “Right now projection represents the worst case scenario for sales tax, as I used 100 percent of a three-year monthly average. I don’t believe it will actually be that high, and we did express that to the unions, but I wanted to be conservative since I don’t have any idea how well the essential businesses are doing since March 17. Plus, it looks like the financial impact to the village will be lingering many months longer than originally estimated.”
Scarpiniti said that figure included 100 percent of sales tax revenues, based on a three-year monthly average of $500,000. Sales taxes are still being collected on goods being sold at places like Costco, Jewel-Osco, Aldi, Binny’s and Michael’s, so sales tax losses won’t reach those levels.
However, the North Riverside Park Mall remains closed and will be through at least the end of May. It has been shuttered since March 19, which means the village will be receiving almost no sales tax revenue from the mall in that roughly two-month period.
The village expects to receive March’s sales tax receipts from the state in June, but it will be a fraction of what’s normally received. July and August sales tax payments from the state will reflect full months of no commerce at the mall.
North Riverside will receive no share of amusement taxes or video gambling taxes from April and May, and just a partial month’s worth from March. Those streams provide a monthly combined average of $70,000 in revenue to village coffers.
Even when some restrictions are eased, local officials don’t believe that the businesses will be operating at full capacity, which could drag out the financial impact over many months.
With that in mind, the village approached its non-union and union employees in late April, asking them to defer planned 2.5-percent pay increases scheduled to be effective May 1 and to suspend vacation requests to limit the amount of overtime.
“This unexpected revenue loss has affected the village’s ability to fund essential operations in the upcoming months,” Scarpiniti wrote to leaders of the village police and fire unions on April 29. “With limited reserves and the prospect of federal or state aid to smaller municipalities unknown, the village must explore every avenue available to us in order to address the anticipated revenue loss and to ensure essential services continue.”
To help limit overtime in the fire department, in addition to asking for a suspension of vacation requests, the village also asked that, during the state of emergency, a lieutenant scheduled solely to work the day shift be placed on a regular shift.
While non-union employees and union police officers agreed to the requests, union firefighters declined to agree.
“We just finished a five-and-a-half year fight, and during that time we spoke at great length on manning,” said Chris Kribales, president of North Riverside Firefighters Union Local 2714, referencing the years’ long fight against the village attempt to privatize firefighting services.
In December the village and union inked a new seven-year deal, retroactive to May 2014 and which expires April 30, 2021.
“Our staffing has gone down, down, down to where now we’re a skeleton crew,” Kribales said. “And now they want to move that day lieutenant to cover overtime. Now you say you need help. This is what we told you about.”
Mayor Hubert Hermanek Jr. said that because firefighters would not agree to the village’s request, the raises for all employees would be moving forward May 1. At the village board’s meeting, held via teleconference on May 11, Hermanek called out firefighters for their stance.
“Since the new [fire] union contract was recently agreed to, village administration has sought to improve its relationship with the union firefighters and move forward,” Hermanek said in prepared remarks at the May 11 meeting.
Hermanek said the village had approved a vacation request from a union member who asked to travel out of state during the state of emergency, increasing overtime as a result.
“However, such gestures of moving forward with the firefighters in a positive manner have not been entirely reciprocated,” Hermanek said.
“Unfortunately, we were not able to come to an agreement on the day lieutenant proposal and the village was forced to spend tens of thousands of dollars during a critical time financially.”
Hermanek said it would have been unfair to withhold raises from police and non-union employees while granting scheduled raises to firefighters.
Scarpiniti said that the village spent about $6,000 in fire department vacation replacements in April, and that adjusting the day lieutenant’s scheduled would have save the village $12,000 per month.
The police department incurred no overtime in April, Scarpiniti said, saving the village about $15,000.
Kribales said that unlike other departments, which had shifted work schedules in response to the pandemic, the minimum staffing of the fire department did not allow room for that.
“We are always open to talking about ways to find a middle ground, but we’ve hollered about staffing issues for many years,” Kribales said.
Meanwhile, village officials are still trying to put together an operating budget for the 2020-21 fiscal year, which began May 1.
Scarpiniti said she had hoped state legislators would have allowed non-home rule municipalities some leeway in passing their appropriation ordinances, which need to be ratified by the end of the first quarter of the fiscal year. In North Riverside’s case, that means the end of July.
Scarpiniti said the village board will hold a budget workshop via teleconference in June. At that time, she said she hoped to have a clearer picture of the financial impact of the state of emergency.
“We are working with departments now on budget submissions and will be having our meetings in mid-June,” Scarpiniti said. “Now that we were not able to defer raises, department’s budgets will be cut to help cover some of the revenue shortfall.”