HomeMy WebLinkAbout08/08/1979 FC Committee ReportVillage of Mount Prospect
100 S. Emerson
Mount Prospect, Illinois 60056
COMMITTEE REPORT
TO: Mayor & Board of Trustees
FROM: Trustee E. J. Miller, Chairman, Finance Committee
SUBJECT: Finance Committee Meeting 8-8-79
DATE: August 9, 1979
The meeting was called to order at 8 p.m. by Chairman Miller. Present
at the meeting were Trustees Richardson and Wattenberg, as well as
Village Manager Burghard and five members of the Village staff. Ad-
ditionally, the meeting was attended by representatives of the news
media and Mr. Erwin Lyons from Lester Witte & Company. Mr. Jack
Ronchetto, Chairman of the Finance,Commission, arrived at approximately
8:10 p.m.
At the request of the Chairman, and with the concurrence of the Com-
mittee members, the second item on the agenda was reviewed.
The Committee reviewed a legal expense summary prepared by the Village
Manager and staff covering the first two fiscal months of this year.
This summary was put together at the request of one of the Committee
members at a former meeting. The Village Manager reported that for
the first two months of the year, May and June, the Village had spent
total legal fees of $14,300 and $15,752 respectively. This compares to
the total legal expenses for 1978 for the same two months when the
expenses were $9,830 and $7,079 respectively. The Village Manager pointed
out that while the short run data indicates that we are expending more
for legal services than -we were last year, it is premature to draw any
conclusion for the remaining periods. For instance, while our total
1978-79 legal costs were $69,367 for in-house counsel, and $63,157 for
outside counsel, the figures for inside counsel do not include retirement
and insurance costs which should inflate that cost by 15%. Trustee
Wattenberg asked that the administration be cautious in its dependence
upon outside counsel and seek opinions only when necessary, and that
the administration should continue to monitor costs on a periodic basis.
Trustee Miller asked that when the July expenses from Ross, Hardies are
received this information should be available to the Committee, together
with year to date figures and comparisons. The Committee agreed that
they would continue to monitor costs on a quarterly basis and the
Village Manager should regularly schedule this as an agenda item. They
also agreed that the data for the first two fiscal months is not con-
clusive enough upon which to base a long term projection.
Finance Commission_ Recommendations:
(a) Elections --The Committee reviewed the agenda material and asked
Mr. Ronchetto -to summarize the Finance Commission's recommendations.
„M l..m, t...:
1 ins nc c Committee Meet inq 8-8-79 Page 2.
Mr. Ronchetto reported that the Commission had recommended on July 1.6
that the advertisements of.. Village elections should be placed in only
one local newspaper to fulfill legal requirements. Additionally, if,
in the judgment of the Board, any one particular election can be met
by 3 judges, as opposed to the current process of using 5 judges, then
only 3 judges should be used. Finally, the Commission, while making
no recommendation, urged the Board to consider whether or not the number
of precincts within the Village for local elections should be reduced.
Chairman Miller then asked Carol Fields, Deputy Village Clerk, to review
her report that had been submitted on August 2.
Ms. Fields stated that the advertisements for the election were placed
in the Tribune because it was specifically stated in the election
ordinance. The decision to place an advertisement in the Mount Prospect
Journal was made bared upon the community service that the Journal pro-
vides and the fact that we do have numerous residents who are regular
subscribers. Ms. Fields recommended that we discontinue publishing in
the Suburban Trib but that we continue publishing in the Herald and the.
Journal. Trustee �....�.___
- Richardson suggested that the Finance Commission's
recommendation be accepted,and that the Village advertise in just one
newspaper. Trustees Miller and Watteriberg suggested that for the minimal
expense it was a good policy to advertise in the two local newspapers,
the Journal and the Herald, but not the Tribune. The Committee then
agreed that they would make a recommendation
to the Mayor and Board of
Trustees that advertisements for local elections be printed in the
Herald and the Journal. Trustee Richardson dissented with that view.
Ms. Fields agreed with the Finance Commission recommendation and sug-
gested that in the future elections would be covered with three judges.
There was some general discussion on the part of the Committee, and they
unanimously agreed to recommend to the Mayor and Board of Trustees that
in future elections the Village use 3 judges .rather than 5.
In terms of the recommendation regarding the number of precincts, Ms.
Fields pointed out that shortly elections are going to be under the
control of Cook County an,d at that time the number of precincts in the
Village for local elections is probably going to increase. Currently,
the County designates 75 precincts for their elections. Ms. Fields
further pointed out that at one time the Village did attempt to reduce
the number of precincts and it caused significant amounts of confusion
to the voters as to their polling place, and when any kind of change
in the precincts occurs the Village receives a substantial number of
calls. on normal election days, the Village Clerk's office receives
approximately 800 telephone calls inquiring as to the local polling
places. If the precincts were reduced in size this added confusion
would substantially increase the number of telephone calls. After some
general discussion on the part of the Committee, they agreed unanimously
to keep our present prcinct system and to. recommend that to the Mayor
and Board of Trustees.
(b) Tax Levy - Trustee Miller asked Mr. Ronchetto of the Finance
Commissionto review the Finance Commission's recommendation regarding
the tax levy. Mr. Ronchetto reviewed the report stating that -the 1979
tax levy should be reduced by $700,000 to $1,000,000 below the amount
Finance Committee Me�efjnq 8-8-79 Page 3.
proposed in the 1979-80 Program of Services. The Finance Commission
was of the opinion that the budget as adopted by the Mayor and Board
of Trustees predicted the beginning cash balance of $1,450,000, and
through an inadvertent error, the cash balances were actually $2,097,000,
substantially higher than the earlier predictions. Because the tax-
payer had contributed revenues in excess of the needs of the community,
the Commission is of the opinion that the tax reduction is warranted
and that it would not cause any problems with the budgeting system and
the Village's financial condition. Mr. Ronchetto pointed out that
the report contained information showing historical fund balances in
the General Corporate Fund and tax returns, and that the Mayor and Board
of Trustees performed an excellent job in containing costs and escalating
tax rates. By making the current reduction, it was the Commission's
opinion that each homeowner would save approximately $40 to $50, and
such a reduction would be in the best interests of the community.
There then followed some general discussion between the individual
Committee members and Mr. Ronchetto regarding the Commission's knowledge
of existing cash balances and the fact that the budget, as presented by
the Manager, did not include adequate revenues for salary increases.
Mr. Ronchetto indicated that the Commission had been aware of this at
the time of their recoinuic>ndation, and indicated that there was still
room for the tax reduction.
Village Manager Burghard reviewed with the Committee the specific,
methods by which the cash balances had been increased, the general
workings of the General Corporate Fund, and the determinations for tax
revision and tax rates as well as the historical fund balances. Village
Manager Burghard pointed out that the cash balances of prior years
cannot be viewed in isolation but must be viewed in relationship to
the expenditures for those years. Graphically, this representation
shows a cyclical trend and that the average cash balances as percentage
of revenue were in the neighborhood of 13.8%. The Village Manager also
pointed out several different policy issues that were still being con-
sidered by the Mayor and Board of Trustees that could require some
expenditure in the future. The Village Manager said that the Finance
Commission's basic conclusions were similar to those of the administra-
tion when the budget was initially prepared. An essential consensus
is that cash balances were higher and that some method should be found
to reduce them. While the Manager agreed with the general intent of
the Commission, he suggested that perhaps the tax cut in the amount
suggested by the Commission might not be suitable for long term cash
policy. The Village Manager then suggested that the Finance Committee
answer three basic questions:
1) What is a reasonable cash
2) How best to achieve that
3) What are the implications
years finances?
balance policy?
position?
of those decisions on future
Trustee Richardson pointed out that the Village does have an ordinance
that requires the establishment of a contingency fund Lind upon that
ordinance and our current budget level,that contingency fund could be
$1,500,000. Mr. Richardson asked whether Mr. Burghard had budgeted this
Fiwance committee Meeting 8-8-79
amount, and Mr. Burghard responded that he had not and that the Village
does not currently have' an"operational contingency fund. The same
ordinance also requires a Capital :Improvement Fund of 1/2 of 1% of the
equalized assessed valuation which would amount to approximately
$1,400,000 .... neir-was his 'budgete .
There then ensued a general discussion to clarify some of the points in
the presentation by Mr. Burghard. The Committee asked Mr. Lyons, the
auditor from Lester Witte & Company, as to his opinion as to cash balance
policies. Mr. Lyons indicated that you cannot pick any specific figure
or specific percentage because cash balances are not in dynamic
relationship to expenditure patterns as well as your monthly cash flow
needs. The minimum amount of cash that should be kept, according to
Mr. Lyons, is that which is sufficient to cover your cash needs within
a cyclical revenue source such as a municipality that gets large amounts
of revenues at two periods of the year.
After some further general discussion, the Chairman asked Mr. Ronchetto
if he had any direction at this point, and Mr. Ronchetto maintained
that the Finance Commission's recommendation should still be implemented
in light of the .fact that the administration had not anticipated the
additional revenue that surfaced ait.ei- pruparat:i,on of the budget.
Trustee Miller indicated that he agreed with Trustee Richardson that
the Village should have a contingency fund, but such a fund should be
used for unexpected expenses and not necessarily for cash reserves.
Cash reserves or the cash balance should be in addition to the con-
tingency fund and should be sufficient to cover our monthly cash flow
needs. Village Manager Burghard pointed out that in making our estimations
of future year tax rates, based upon the Commission's recommendations,
we had attempted to keep the current policy of $600,000 cash reserve.
However, that does not seem as though it could be a likely amount in
the future if expenditures increase and the Village's cash position
at the end of July was, -in fact, $620,000 below current revenues.
The Committee then reviewed the outstanding issues that had been pre-
pared by the Village Manager, and decided that in a number of those
cases there would be no way the Village could anticipate any expenditure
or construction this year. Of those, where most optimistically the
Village Board could agree to initiate an immediate response, they were
tabulated to cost in the range of. $440,000 to $680,000. Trustee Miller
suggested that the amount be reduced to about 700 of that level as the
most likely expense. Therefore, it appeared that even if the Village
Board decided to proceed with all the projects it has discussed in the
past several years but not budgeted, we would only need approximately
$300,000 this current fiscal year.
After some further general discussion and a review once again of future
years' tax rates, the Committee agreed that there should be a one time
reduction in the tax levy by an amount o<y'$650,Ot Chairman Miller
stressed that due to uncertainties i the f�`fe an terms of the economy,
as well as the activities of other governmental jurisdictions, we
must continue to work at the tax levy and to develop a long term policy.
The policy should include statements to cover our normal cash needs as
well as an adequate contingency fund. The Village Manager was directed
Vinance Committee MeeLing 8-8-71)
Page 5.
to prepare for the Committee and the Village Board the effects of the
one time tax reduction of $650,000 as well as some language that could
be adopted for a cash policy statement.
Village Board CommitLee Structure:''
Due to the lateness of the meeting, this matter was deferred to the
next Committce meeting.
Budget Process:
Due to the latenesq of the meeting, this matter was also carried over
but the Committee members agreed that it is time for the Village to
begin to discuss budget procedures for next fiscal year. and that the
Village Board should review an narlier memo distributed by the Village
Manager suqqesting some ways that the Board might sit down and discus,,,-.
certain prinrities.
The meeting was adinurned at 10Ao p.m,
kdward a, Miller
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