If Riverside cannot find additional revenue streams by 2007, village hall will face personnel cuts and residents will experience a reduction in services according to the latest financial projections from the village's management staff.
With that in mind, staff and elected officials look to be examining all options at their disposal, including the possibility of a tax referendum, to address a forecast that shows the village's general fund reserve dwindling steadily over the next several years.
"The village has been in a belt-tightening mode for years," said Village Manager Kathleen Rush. "We're continuing to work within our revenue stream as best we can without sacrificing services.
"What the staff would like to keep in front of the board is, how long can we keep doing this if we have to keep constraining dollars for training, services and service enhancements? The community demands an excellent organization, but we keep asking employees to reduce, reduce, reduce."
The village's proposed 2006 budget shows expenditures exceeding revenues by $133,000 in its general operating fund, which pays for day-to-day operations. The village board plans to use an unbudgeted $145,000 general fund surplus it expects for fiscal year 2005 to balance the shortfall.
In coming years, however, the general fund balance is expected to drop from its current level of $5 million to $2.2 million. In 2007, the village's general fund is expected to experience an $88,000 shortfall in its general fund, and staff have projected that by 2010 the general fund balance will be less than 25 percent of annual expenditures. Last year, the board voted to set the bar for the general fund balance at 35 percent of expenditures.
"If we start to approach 2009 without an increase in our revenue stream, we're going to be in trouble," Rush said. "We should not wait until 2009 to go to residents, because it'll be another year before we would see any money [from a referendum].
"If the intent is a property tax increase, you want to look at it in 2007, so there's enough time to plan," Rush added.
Village President Harold J. Wiaduck Jr. said it's too soon to be speculating about a referendum bid, but acknowledged that the village needed to face the pressure on its general fund balance.
"There's no plan at this time to request a referendum," Wiaduck said. "The general fund is in balance, but we have to continue to recognize the fact that this is becoming a greater problem as time goes on. At the appropriate time, this board or a future board is going to have to address that."
The single biggest source of pressure on the general fund is the increasing level of funding for police and fire pensions. Between 2005 and 2006, the amount of money Riverside contributes to its police pension fund will rise by 42 percent. By the end of 2006, that one fund will have a balance of $7.7 million, by far the largest single village fund. In fact it will comprise 45 percent of all money in all village funds combined by the end of 2006.
And the police pension fund is still far from fully funded. According to Finance Director Christy Powell, by the end of 2005, the police pensions will be funded at a 65.4-percent level. Riverside will increase payments to the police pension fund by 10 percent in 2006, but the village will actually lose ground, with funding falling to 64 percent by the end of 2006.
The state has mandated that police pensions be fully funded by 2034. That spells trouble over the long haul for the general fund, which is the source for any increased payments to the police pension fund.
"Because of the tax caps, the more money we put into the pension fund, less is going into operations," Rush said.
As a result, village officials may look to fund police pensions through a referendum that specifically targets that drain on the general fund.
"That's probably where we would go, whether it was done in 2007 or 2008," Wiaduck said. "Over the next three or four years we're probably going to have to address that."