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HomeMy WebLinkAbout01/23/1997 FC MinutesFinance Commission Minutes of the Meeting January 23, 1997 I. Call to Order The meeting was called to order at 7:OOp.m. Those present included Chairman Richard Bachhuber, and Commission Members John Engel, Vince Grochocinski, Newt Hallman, John Korn, James Morrison, and Ann Smilanic. Also present were Village Manager Michael Janonis, Finance Director Brian Caputo, Assistant Finance Director Carol Widmer, Village Trustee Irvana Wilks, and Village Board Candidate Dan Nocchi. Commission members Tom Pekras and Joe Etchingham were absent. H. Approval of Minutes The minutes of the November 14, 1996 meeting were approved as presented. III. Presentation of the Monthly Report for December 1996. Finance Director Brian Caputo presented the Budget Revenue and Expenditure Summaries for December 1996. This report summarizes the Village's revenues and expenditures by classification and fund for the current month and year to date. The report also has a column indicating the corresponding 1996 budget figure and a column indicating the ` unreceived balance." The unreceived balance is also represented by a percent figure. Mr. Caputo advised the members of the Finance Commission that these 1996 amounts are preliminary, cash -basis figures. IV. Discussion of Funding Alternatives for the Street Improvement Plan At its September 26, 1996, meeting the Finance Commission recommended that the Village adopt a pay-as-you-go approach to funding the backlog of street improvements identified by the Public Works Department. During its budget deliberations, the Village Board expressed an interest in exploring the possibility financing street work in future years with some form of current revenues. The Village's 1997 Budget was approved with a $2,500,000 bond issue to provide new money for the 1997 street improvement program; however, this was done with the understanding that early in 1997 the Board would consider using fund balances and other sources to finance the 1997 street program instead of issuing the bonds. Mr. Caputo summarized the contents of his January 21, 1997, memorandum to the Village Manager (subject: Funding Alternatives for the Street Improvement Program) which was provided to the Finance Commission prior to the meeting. Exhibit 1 "1997 Street Improvement Program Available Funds" has identified a total of $1,900,000 which could be used to provide additional funding for the 1997 street program. In the General Fund there is $695,000 available. This amount is in excess of the 15% fund balance goal for the General Fund. The $1,000,000 in the Capital Improvement Fund is the money which had been set aside for renovation of the Village Hall. Interest on previously expended bond proceeds of $55,000 is available in the Street Improvement Fund. Finally, $150,000 of Community Development Black Grant funds are available. These are CDBG monies which were allocated to the Village in prior years but were not spent. Mr. Caputo directed the members of the Finance Commission to the Public Works proposed funding program "Option 4 (Revised)" which sets forth the ten-year plan to reconstruct and resurface the backlog of streets needing these repairs and the estimated new monies over and above the $1,000,000 in NET and $300,000 in General Fund contributions already provided for road repairs. The revised plan assumes that $1.9M in new money will be available instead of the $2.5M bond issue. The amount of new money needed each year ranges from SIAM to $2.6M over the ten-year period. The next table, "Funding Requirement for Street Improvement Program Option 4," outlines current debt service requirements for the 1994 and 1996 bonds issued for street improvements, the planned additional expenditures under the revised Option 4, the available funds from the 3/4% of the second 1/4 cent home rule sales tax, and finally the new revenues needed each of the nine years after 1997 in order to implement the revised Option 4. A total of $13,304,543 will be needed over the nine=year period. Finally, Mr. Caputo presented a "Survey of Selected Tax Rates and Fees" which indicated the levels of tax rates and fees imposed by neighboring communities. Currently, Mount Prospect's vehicle sticker rate in the highest in the area. The Village's property tax rate is in the middle range. Only Park Ridge and Des Plaines currently impose a one cent per gallon gasoline tax. Mr. Caputo turned his discussion to the possible sources of funding for the street program. The advantages and disadvantages of each revenue were reviewed by the members of the Finance Commission as well as how the timing of the receipt of the revenues would have an effect on when street projects could begin. For instance, gasoline tax, home rule sales tax, and utility taxes are all received monthly. Property taxes are available in March and September and most of the vehicle license fees are received from February through April. It would take a few months to accumulate enough revenue to fund a street work early in 1998. The members of the Finance Commission discussed the funding sources in great detail. Commission members remarked that using property taxes for a funding source provided an advantage to residents as far as being deductible for federal income tax purposes. Commissioners felt that increasing the vehicle license fee to provide some of the necessary revenue would provide a link between the users of the roads and the repair of the roads. The disadvantage is that the license fee is already the highest in the area and as the fee increases it becomes more difficult to collect from reluctant residents. The gasoline tax also provides a link between the actual users and the road deterioration. It is estimated that such a tax would yield approximately $210,000 annually. Currently, the Village's home rule sales tax rate of 'A cent is most common among neighboring communities. Only Palatine has a higher rate. The Village's utility tax, which is currently at 2% on electricity, natural gas, and telecommunications, could be increased to provide adequate funds for the program. An increase from 2% to 4.5% would be sufficient to meet the funding needs. Several commissioners voiced the opinion that enacting or raising one or, at the most, two taxes or fees would be the best approach. The utility tax received the most support from the members of the Finance Commission because it is paid by everyone, it has a growth element which would generate sufficient funds, and the collection system is already in place. At the conclusion of their discussion, the members of the Finance Commission unanimously endorsed the recommendation of staff to adopt a $1.9M spending plan from existing available funds in lieu of a $2.5M bond issue for the 1997 street improvement program. They also stated that there is a need to establish a long-term funding plan for the continuation of the road construction program. V. Adjournment The meeting was adjourned at 9:25p.m. The next meeting will be held on February 27 at 7:00p.m. Respectfully submitted, Carol L. Widmer Assistant Finance Director clw