Brookfield Village President Michael Garvey set the end of July as the deadline to pass a balanced budget for the current fiscal year. But, in order to do that, the village board and village staff are going to have to cut some $1.3 million in general operating expenditures from the preliminary 2005-06 budget unveiled last week.
According to the budget provided by Village Manager Dave Owen and Finance Director John Dolasinski, if no cuts are made, the village expects its general operating fund to take in $11.4 million, while spending $12.7 million.
During a budget workshop for village trustees on June 8, however, Owen proposed a host of cuts to trim the difference between revenues and expenditures. Included in those recommendations were rescinding some $400,000 in tax abatements to residents living in the village's six Special Service Areas, cutting $94,000 from the police department's proposed budget, slashing $163,700 in improvements requested by the Department of Public Works and forgoing $76,000 in proposed improvements to the Oak Savanna in Kiwanis Park.
In all, Owen proposed some $762,000 in cuts to the preliminary budget, leaving trustees to wrestle with how to cut another $530,000 in order to make the budget balance. Owen said that the board could also consider further cuts "that should be discussed in closed session" that would bring the budget deficit down to $250,000.
Asked if that meant the board might consider personnel cuts in village departments, Garvey confirmed that "there is a possibility of personnel cuts. The village manager will present some options to the village board as early as [last Monday]."
"My desire is to have a balanced budget," Garvey said. "But I don't want to cut essential village services. I think we can and will work toward a balanced budget."
In past years as a trustee, Garvey has been critical of village budgeting where expenditures exceeded revenues causing the village's general fund surplus to diminish. At the end of fiscal year 2000-01, the Village of Brookfield had a general fund balance of $6 million. By the end of 2002-03, that surplus had fallen to roughly $2.7 million. Over the next two years, the village held the line on expenditures. As a result, the general fund balance remains at just under $2.9 million.
If the 2005-06 budget goes unchanged the surplus in the general fund would fall to $1.5 million, or just 12 percent of the village's annual expenditures. Keeping the budget balanced would allow a general fund balance equal to almost 23 percent of annual expenditures.
And while there is no hard and fast rule for exactly how much money ought to be held in reserve, the general fund surplus is an important source of cash.
Dolasinski explained that revenues do not come to the village in a regular, linear fashion. Rather, they come in spurts since property taxes?"the village's main revenue source?"are collected in the spring and fall.
"During the lean times there are more expenditures than revenues, so then we have a cash crunch," Dolasinski said.
Asked if he would recommend the general fund balance falling to $1.5 million, Dolasinski said, "I would not recommend that. ... My recommendation is to come up with some kind of break-even budget this year that lets the surplus stay where it is."
Trustees have until the end of July to finalize the village's financial plan for FY 2005-06, which began May 1 and goes through April 30, 2006. The board will adopt two separate documents?"a budget and an appropriations ordinance.
While Garvey said he wants the board to approve a budget, the board is required approve an appropriations ordinance by July 31.
The appropriations ordinance is the legal document that limits spending for the village. Typically, the appropriations ordinance will set higher spending limits (as much as 20 percent higher) than the budget. The reason for that is that the village cannot spend any more than is appropriated for a budgeted item without a public hearing and vote to amend the ordinance.
Garvey said that village staff will use the budget as its policy document, not the appropriations ordinance. The reason for the higher numbers in the appropriations ordinance will be to allow for emergency expenditures.