As Riverside looks ahead to next year’s budget, trustees have already had to make tough calls on which projects may receive funding in the face of a budget deficit in the village’s capital projects fund.
At the village board’s Sept. 5 meeting, Riverside Finance Director Yvette Zavala presented Riverside’s capital improvement plan for fiscal years 2025-2034 to begin the village’s budgeting process for the upcoming year. She mentioned one important highlight — Riverside is set to complete an estimated $4 million in lead service line replacements next year — before diving into a more pressing matter.
“At the end of this year, the current fund balance in the capital projects fund is expected to be $49,000 … Our estimated unassigned balance in the general fund this year is $507,500,” Zavala said. “The total needed to fund the capital projects expenses this year is $1,250,128. This chart here estimates that [if] we use half of our unassigned fund balance in the general fund to transfer over to capital projects, even with that transfer, we are still unfunded by $864,426.”
Village Manager Jessica Frances asked the board to consider drawing down a portion of cash reserves the village has with the Intergovernmental Risk Management Agency as a way to fund a portion of the capital projects.
Village staff provided trustees with a list of the seven most “discretionary projects” to consider including in or removing from next year’s CIP. Altogether, staff expect the seven projects to cost $378,576, meaning if trustees agree to nix all of them, Riverside will still need to come up with $485,850 to meet planned expenditures.
In a phone interview Thursday, Sept. 12, Village President Douglas Pollock said Riverside is not actually facing a financial deficit; rather, the village board must decide from where to pull funding to cover the costs of projects as it looks ahead.
“Even though we have to use terms like ‘deficit’ and ‘withdrawal’ and all those terms, this is all cash that we have. It’s all revenue we have, and it’s just how much of our revenue that we want to plan to spend next year,” he said.
In the same interview, Frances said Riverside tends to be “super conservative” with its revenue projections so it can avoid budgeting for a higher surplus than it will record at the end of the year.
The list of “discretionary” village projects included items like a replacement of a fire department SUV costing $80,000, a skid-steer plow for sidewalk snow removal priced at $60,000, gateway and wayfinding signage outside business districts estimated at $45,000 and the village’s strategic planning process costing $25,000. The most expensive item on the list was a new chassis for a new street plow that will replace a 16-year-old public works vehicle; the chassis will cost $143,576 from the general fund, with an equal amount coming from the sewer and water fund.
Trustee Megan Claucherty quickly pointed out that cutting all seven projects from the budget would not free up enough funding to cover the deficit. Frances said she and staff had already reviewed every item within the CIP.
“Those were items that were highlighted that we could remove. [Of] the items within the CIP for 2025, we have certain items that we’re contractually obligated to [pay for] on an annual basis,” Frances said. “There are certainly items that, if the board elected, we could certainly cut, but for long-term purposes, it may not make financial sense, in my professional opinion.”
Some of those items could be, for example, $25,000 invested in reforestation efforts or $15,000 to treat village trees for damage from spongy moths, Frances said.
Riverside’s reserve funds
However, there is another option. Since 2013, Frances said, Riverside has built up nearly $1.7 million in reserve funds at the Intergovernmental Risk Management Agency. IRMA is a municipal risk pool in northeastern Illinois that many communities, including Riverside and Brookfield, use to manage financial risks and stabilize costs, similar to an insurance policy.
Frances said Riverside makes an annual contribution to IRMA, determined by its actuaries. The risk pool uses the money from every member to both make investments and pay out claims. At the end of each year, IRMA reviews the past five years of activity to determine how much money it should return to the member pool and what proportion of that each community receives.
Frances said “a number of different factors” can impact how much Riverside and other municipalities get back each year, including how well IRMA’s investments perform and how many claims it receives compared to the actuary’s estimate. Communities that keep their returned money at IRMA rather than withdrawing it earn additional interest. Before Frances joined Riverside in 2012, she told trustees, the village withdrew its excess IRMA reserves at the end of each year to balance its budget rather than accumulating funds.
“More or less, the philosophical question is, ‘At what point are we going to use that?’” Frances said at the meeting. “If we need to withdraw it, we can. However, if we perform well with different projections beyond the [$507,000 general fund balance] that we’re conservatively looking at, then perhaps we don’t need to take out as much from IRMA.”
In the course of discussion, Trustee Cristin Evans identified the wayfinding signage as an item that could be deferred to a future year. Trustee Jill Matteo said she would like more information about strategic planning before agreeing to keep it in next year’s budget. Trustee Aberdeen Marsh-Ozga suggested deferring some of the “discretionary” items until Riverside can secure grant funding for them, which Frances said the village could do.
Claucherty said she felt strongly about the board’s need to identify items to eliminate from the budget in residents’ best interest despite Frances having gone through it already.
“I view this as one of the, if not the, most important thing that we do as this board, and I think it is a tremendously important obligation that we bear to be prudent stewards of this public capital, so from my seat, I think we need to chip away at that $864,000 considerably,” she said. “I’m very open to IRMA. I falter a little bit at the idea of taking away a third of our IRMA balance in one year without a little bit more diligence on our part.”
About that costly new plow
As the board discussed, the topic turned to the largest “discretionary” cost on next year’s budget: nearly $150,000 slated for half the cost of the street plow chassis. Public Works Director Dan Tabb said the cost is only for the chassis, and the village will need to pay in the future for the body of the new vehicle, which will make up a third of the village’s snowplow force once it is fully built.
Tabb said that, if the board chose not to buy the chassis next year, its production of the full vehicle would be delayed. He had already worked with a manufacturer to secure a chassis for Riverside that would be built in “Q4 2024,” but the village would not have to pay until January 2025.
“That is an agreement that Peterbilt has extended to us. If we forego that, we get slotted at the end of the line, which is Q4 of 2025 at the earliest,” he said.
During discussion, Claucherty advocated for cutting every “discretionary” project from the budget, including the chassis, to position Riverside to withdraw as little from its IRMA reserves as possible. However, Evans said she would wish to keep the chassis in the budget.
Tabb said the chassis manufacturer could not keep Riverside’s place in line if the board did not direct to keep it in the budget and commit to purchasing the chassis at its next meeting.
“I have a handshake agreement with Peterbilt,” he said. “If the board decides tonight that we’re cutting that [full] list, I’m calling Peterbilt tomorrow and giving away our spot.”
If the 15-year-old plow set to be replaced fails, Tabb said the public works department would take longer to salt the roads and up to three hours longer to clear them of snow, as it would have only two plows to do the work of three. He said he could not predict how long the 15-year-old plow set to be replaced will survive as it will continue to see use this winter.
Trustee Elizabeth Kos said the loss of the existing plow would leave the roads less safe during snowfall as the village’s two plows work to clear them. As the board discussed, Trustee Alex Gallegos made it clear they could not take the risk of residents getting injured to avoid paying the cost for the plow chassis. Claucherty said the board must find ways to make cuts in the budget.
In response to a head count from Pollock, the board voted 5-1 to keep the chassis in the village’s 2025 budget, with Claucherty voting no. According to Pollock, at the next board meeting, village staff will bring forth a list of other projects trustees could consider cutting from the budget, though as Frances noted, these projects will be even less “discretionary” than those the board already considered.
