HomeMy WebLinkAbout02/04/1987 FC minutesMINUTES
FINANCE COMMISSION
February 4, 1987
I Call to Order
The meeting was called to order at 7:30 PM. Commissioners present were
Richard Bachhuber, Newt Hallman and Ann Smilanic. Also present were Acting
Village Manager Michael Janonis and Finance Director David Jepson.
II Overview of 1987-1988 Budget
Acting Village Manager Janonis presented an overview of the Village's 1987-
1988 budget. The total budget of $33,614,905 represents a 5.80, increase over
the amended 1986-1987 budget of $31,771,340. He stated that the 87-88 budget
attempts to maintain and improve Village services and provides for several new
projects. He explained that the preparation of the budget is a three month
process of reviewing and evaluating expenditure requests, and planning how the
services and projects will be financed. The result is the budget that has
been presented to the Mayor and Board of Trustees.
Mr. Janonis pointed out that there are two format changes in the 1987-1988
budget. First, the former Fire Suppression Program and the Emergency Medical
Services Program in the Fire Department have been combined into one program
called Fire Department Operations. The change recognizes the true operation
of the Department and will provide an easier method for tracking expenditures.
The second change is the addition of a Capital Improvements Section of the
budget. In previous years, major improvements were carried in the various
operating budgets, and this practice unnecessarily distorted the operating
budgets on a year-to-year basis. It is hoped that the format changes will
improve the understandability of the budget document.
Mr. Janonis then reviewed the changes in various expenditure classifications.
The most significant increase is in the capital expenditures category with
some $4.6 million more in 1987-88 than in 86-87. The increase is primarily
due to the proposed Public Works Facility and the George/Albert Street
Improvement Project. An increase in debt service expense can be attributed to
the anticipated issuance of $5,555,000 in bonds during 1987-1988. Pension
expense shows a marked decrease from 1986-1987 because of extraordinary gains
in 1986-1987 that were treated as expenditures in 1986-1987. Finally,
personal services and contractual services show modest increases and commo-
dities are expected to be less in 1987-1988 than in 1986-1987.
The budget proposes two new full-time employees in the Code Enforcement
Division and a part-time social worker in the Human Services Division. There
will be a net increase of one full-time employee as one full-time employee in
the Cable TV Division is being replaced by two part-time employees.
No new revenue sources are being proposed. However, increased receipts are
expected from sales tax, vehicle licenses, business licenses and permit fees.
Additionally, a water rate increase of approximately Sa which has been
deferred on two previous occasions is being recommended. The property tax
rate for 1987 is expected to be $1.102, up from an estimated $.9849 for 1986.
The proposed tax rate will result in a Village tax levy of $182 for a typical
residence with an EAV of $16,500.
Mr. Janonis then reviewed expenditures in the General and Water Funds. Total
General Fund expenditures of $13,288,520 are $729,345 more than 1986-1987. The
increase includes an anticipated increase of $228,000 in refuse disposal
costs; a provision for salary increases of $300,000; a contribution of
$100,000 to the Street Maintenance Program; and a commitment of $75,000 to the
Facade Improvement Program. An increase of $1,016,000 in Water Fund expendi-
tures is due to a planned contribution of $1,070,000 to the construction of
the Public Works Facility. Mr. Janonis also mentioned that in addition to the
$100,000 from the General Fund for street resurfacing, an additional $631,000
will be expended from the Motor Fuel Tax Fund for street resurfacing and
reconstruction.
Mr. Janonis then pointed out some of the more significant budget items in the
various operating departments:
Police Department expenditures include the purchase of 15 patrol vehicles
at an estimated cost of $185,000. Additionally, an increase of $5,000 in
the Physical Examination Account includes the cost for a proposed
physical examination program for police officers.
Fire Department expenditures include the proposed addition of two Code
Enforcement personnel and a stepped-up schedule for replacing capital
equipment. Also included are the replacement of two staff vehicles and
the installment payments for two front-line pumpers.
Street Division In addition to the previously mentioned increases for
refuse disposal costs, an expanded tree trimming schedule has been
included. Also, a total of $60,000 has been proposed for repairs and
improvements identified in the Facilities Study and $15,000 for replacing
a portion of the driveway at the Public Safety Building.
Parking Fund A parking study of the downtown area is proposed as a
joint -effort by the Village, the Library and the Mount Prospect State
Bank.
Acting Manager Janonis concluded by stating that the 1987-1988 budget
represents an ambitious but reasonable program providing necessary services
for Village residents.
The Commissioners discussed the expenditures as proposed. Specific approval
was expressed for the budget format changes and with the information that was
presented.
III 1987-1988 Budget Revenues
Finance Director David Jepson presented an overview of the revenues that are
expected in the 1987-1988 fiscal year. Total revenues of $30,939,290 along
with existing fund balances of $2,675,615 are intended to finance the proposed
budget of $33,614,905.
Specific revenue sources include:
Sales Tax at $4,900,000 is one of the most important revenue sources for
the Village. When we consider that sales tax results from collecting 190'
of retail sales in the Village, the $4.9 million represents sales of
$490,000,000 and is an indication of a strong local economy.
Property Tax is the largest single source of revenue that the Village
receives. At $5,843,200 it represents 19°0 of the total budget. It is
estimated that 58% of the 1986 levy and 4290' of the 1987 levy will be
received in 1987-1988. The 1987 tax rate is projected at $1.102 per $100
EAV with an estimated EAV for 1987 of $548,763,000.
Sale of Bonds Five debt issues totaling $5,555,000 are anticipated in
1987-1988:
Public Works Facility $4,000,000
Redevelopment District 550,000
George/Albert Residents 365,000
George/Albert Village 350,000
Capital Equipment 290,000
$5,555,000
Service Charges of $3,765,160 are made up of water and sewer charges of
$3,500,000, parking fees and other charges.
Fees include revenues from permits, vehicle licenses, business and liquor
licenses, franchise fees and a variety of other fees.
Investment Income of $2,669,160 is being anticipated. Of this total
$1,000,000 is expected in the Police Pension Fund and $1,200,000 in the
Fire Pension Fund with the balance from other Village funds.
Other Revenue includes sales of property, employee withholdings, fines
and other miscellaneous sources of revenue.
Special Service Area Property Taxes There are six special service areas
anticipated for 1987-1988, the largest of which is SSA #5. SSA #5 was
established to provide for the fixed costs associated with obtaining Lake
Michigan water. The property tax for SSA #5 is 94% of the total special
service area taxes levied. When SSA #5 was established in 1982, it was
estimated that the 1987 tax rate would be $.44 per $100 EAV. Our current
estimate is for a rate of $.31.
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IV
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Intergovernmental Revenue includes:
State Income Tax $1,287,500
Motor Fuel Tax 915,000
CDBG Grant 397,950
Other Grants 69,000
$2,669,450
As anticipated, there will be no Revenue Sharing Funds in 1987-1988.
Fund Balances It is expected that the following fund balances will be
drawn down:
General Fund $ 220,020
Capital Improvements 890,370
Water Fund 1,295,280
Other Funds 269,945
$2,675,615
The Commissioners discussed the various revenues and the proposed tax rate for
1987. They expressed satisfaction that the taxes paid by residents is very
reasonable in relation to the services received.
Public Representation and Village Administration
Mr. Janonis briefly reviewed the proposed budgets for Public Representation,
Village Administration and Cable Television. For Public Representation, the
$78,725 budgeted for 1987-1988 represents a $11,525 decrease from the 1986-
1987 total of $90,250. The difference can be attributed to a reduction in the
Special Projects account which included costs in 1986-1987 associated with
recruiting a new Village Manager.
In Village Administration, the total proposed budget of $607,950 includes
$300,000 for salary adjustments for Village personnel. All General Fund
personnel salary increases, except employees covered by on-going agreements,
are budgeted initially in the Village Manager's budget and are then redis-
tributed to other departmental budgets after agreements are reached. Existing
labor agreements for the Police Association and the Firefighters' Association
terminate on April 30, 1987 and the agreement for Public Works' employees ends
on July 31, 1987.
There are no other substantive changes in either the Village Manager's budget
or the Cable Television budget.
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V Management Services
Mr. Jepson explained that the Finance Department, the Village Clerk's Office
and the Risk Management Program make up Management Services. The total
1987-1988 budget is $2,064,525 or 60 of the total budget. Insurance costs
account for 2/3 of this total.
In the Finance Department's 1987-1988 budget, the noteworthy difference is the
decrease in Capital Expenditures of $8,500, due primarily to the inclusion of
computer equipment in the Capital Improvement section of the budget. Inter -
fund Transfers include $925,000 for insurance for general governmental
operations and $30,000 for the first installment for computer equipment.
In the Village Clerk's Office, the total budget for 1987-1988 represents a
decrease of $5,275 from 1987-1987. The deductions are due to lower amounts
for commodities of $1,700 and capital expenditures of $2,500.
Mr. Jepson pointed out that insurance costs for 1987-1988 are expected to be
$1,372,800 compared to an estimated $1,169,000 in 1986-1987.
A discussion followed regarding the Village's current insurance situation. At
the present time, the Village is self-insured for casualty, property and
employee medical claims. Various levels of stop -loss insurance are in place
for all coverage except liability. The Village currently has no coverage for
liability claims. The Village is working with a group of other municipalities
to form a High Level Excess Liability Pool (HELP) to provide excess liability
insurance for claims in excess of $1 million. It is expected that HELP will
be formed by April 1, 1987.
One of the other areas of concern is the cost in the current year for medical
claims. The net cost for medical insurance benefits (claims plus stop -loss
insurance less employee contributions) in 1985-86 was $417,767 for an average
of $1,719 per employee. The net cost in 1986-87 is expected to be $585,000
with an average cost per employee of $2,312. The sharp increase can be
attributed to several exceptionally high claims in 86-87. Two claims exceeded
the stop -loss of $50,000 and six claims accounted for $212,000 in claims.
Because the level of claims paid in 86-87 is expected to be some 3190' higher
than in 85-86, the amount budgeted for 87-88 has been kept at the same level
as 86-87.
VI Next Meeting Date
The Commissioners set the next meeting date for Thursday, February 19, 1987 to
review the Public Works and the Planning and Zoning budgets.
VII Adjournment
There being no further business, the meeting was adjourned at 10:10 PM.
Respectfully Submitted,
David C. Jepson, Finance Director
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