As North Riverside officials plug final numbers into the village’s 2023-24 operating budget, the estimated general operating fund deficit appears to be growing.
With elected officials backing the hire of two additional police officers whether or not North Riverside is successful in obtaining federal grant funding, the projected operating fund deficit has grown from about $1.3 million to about $1.5 million, according to Ryan Lawler, the village’s finance director.
That deficit increase followed in the wake of three budget workshops held over about 11 hours across three days last month. The final draft budget is expected to be posted to the village’s website no later than July 7. The budget itself is expected to be approved at the village board’s July 17 meeting.
North Riverside’s fiscal year started May 1. Illinois law requires the village to pass an appropriations ordinance, which sets spending levels, by the end of the fiscal year’s first quarter.
Before the village board votes on the budget, however, elected officials will meet on July 10 to discuss legislative priorities for the fiscal year. The discussion is expected to cover a lot of ground – from what to do with the former church property which the village owns on 8th Avenue to sustainability initiatives as part of the Cross Community Climate Collaborative (C4) to the ongoing dilemma on how to fund police and fire pensions.
Mayor Joseph Mengoni said elected officials need to give staff clear direction to focus their energies.
“Everybody keeps throwing things at [Village Administrator] Sue [Scarpiniti] and her staff,” Mengoni said. “Where do we want the administration to focus?”
Lawler said he anticipated a serious discussion on pension obligations, which amount to about $4 million annually and have no dedicated source of funding beyond general operating revenues.
That has forced the village board to approve budgets that anticipate deficit spending and then hope revenue assumptions are lower than predicted or that staff can hold the line on costs.
In recent years, that strategy has worked. In 2021-22, an estimated budget deficit of $1.6 million turned into a surplus of about $1.7 million due in large part to a windfall North Riverside, and other municipalities, collected in American Rescue Plan Act funds, part of the federal response to counteract the economic havoc wreaked by the COVID-19 pandemic.
In 2022-23, the village board passed a budget with an operating deficit of $870,000. With stronger than projected sales tax and other state shared revenues, the deficit turned out to be closer to about $100,000, Lawler said.
But hoping for the best is not necessarily a sound financial strategy in the long term, and elected officials are expected to talk about the possibility of seeking a referendum for a separate tax levy tied to police and fire pension obligations.
“I think the [trustees] are doing a great job year over year, but we are kind of getting to that point where you can’t carry these $1.5 million, $2 million deficits over every year and just hope that at the end of the year that things just work out,” Lawler told the Landmark in an interview last week. “I think we got really lucky in [fiscal year 2022-23] but that’s not a long-term strategy for success.”
The village is seeking federal grants to fund, at least in the short term, the salaries for six new firefighters and three police officers. Those grants are competitive, however, and the village has not been successful in landing them in the past.
A dedicated tax levy to fund pension obligations would immediately solve the operating deficit budgeting, Lawler said.
In a phone interview on June 26, Mengoni didn’t sound confident that a discussion about a pension levy referendum would go very far. The subject has not been popular with the public or elected officials in the past.
“There’s likely to be a discussion on that, sure,” said Mengoni about the village board tackling a pension levy referendum on July 10. “As always, it’ll get shot down. Sue and Ryan wouldn’t be doing their job without bringing it up, so they’ll bring it up and we’ll see what the board decides.
“I’m not pushing for it one way or another, but it’s always going to be a discussion item.”
In addition to hiring two new police officers, which will take some months due to the process of putting a list of candidates together, hiring them and getting them trained, the budget includes hiring a deputy fire chief for the first time since 2018.
Capital expenditures include using $350,000 in motor fuel tax funds for road improvements and using $140,000 in operating funds to buy two new police cruisers and $30,000 for three new in-squad laptops and about $70,000 for portable radios for the police and fire departments.
The village will also spend an estimated $125,000 to repair and paint the gazebo in Commons Park. The recreation department reportedly will seek to offset that cost by implementing a new gazebo rental program for private events.
The public works department’s water division will be getting a new $226,000 truck, money for which will be coming out of the water enterprise fund.
Apart from the two new police officers, trustees deferred about $1 million in supplemental capital expenditure requests, including Village Commons security enhancements, a new ambulance and two other public works dump trucks.