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Oak Park searches for another million in cuts

Budget in 2019 would limit tax levy hike to 3 percent but dip into reserves

November 13th, 2018 1:13 PM

By Timothy Inklebarger

Staff Reporter

The Oak Park Board of Trustees continued its work on the 2019 budget, but it's effort to keep the property tax levy increase at 3 percent will likely be a temporary fix.

Trustees are spending down cash reserves to hold the line on what would otherwise be closer to a 10 percent increase on property taxes next year.

It's a temporary fix because those reserves, once spent, will take time to replenish. That could happen through increased revenues or reduced spending.

Trustees discussed the tactic at a special board meeting at Oak Park Village Hall on Monday, Nov. 12. They directed Village Manager Cara Pavlicek and Chief Financial Officer Steven Drazner to go back to the budget and find at least another $1 million in cuts, if not more.

The proposed budget, which has not been approved by the board of trustees, notes that about 65 percent of the general fund is used to maintain the police and fire departments. Roughly 75 percent of the budget goes towards salaries and benefits for all municipal employees – that rounds out to about $62 million in the budget.

The recommended 3 percent increase to the tax levy equates to a revenue increase of about $960,000 over the prior year. The proposed budget would spend about $2.1 million from budget reserves. That would reduce the general fund balance from $12.7 million to an estimated $10.5 million.

"It is unlikely that the village can continue to limit property tax increases to 3 percent annually going forward unless there are increases to other revenues (such as sales tax or similar), there is a dramatic reduction in non-core service support (e.g. property tax support for grant funding agreements or services provided to other taxing bodies) or there is a dramatic reduction in core municipal services," the budget notes.

At the Monday board meeting, trustees lamented the reality that spending down budget reserves was a temporary fix and that a structural change needs to take place.

"Business as usual is not going to cut it going forward," said Trustee Dan Moroney, who pointed out that without spending down reserves the tax increase would be much higher.

"That works for this year, but we don't have that tool every year and eventually when we can't use that tool a levy could be much higher," he said.

He said it is not a criticism of village staff but referred to the tactic as a budgetary "trick."

"I would like us to look at what a budget would look like if we didn't draw the $2.1 million from the fund balance," he said.

Trustee Deno Andrews agreed, calling on the board and village staff to explore reducing the budget by $2.1 million to have a true 3 percent levy increase and not one accomplished through reliance on budget reserves.

"I have a lot of interest in seeing what $2 million less looks like," he said.

Trustee Bob Tucker said the move to use budget reserves is "not a trick" but a strategy that might be recouped through unforeseen future revenues. The property transfer tax revenue through the sale of large buildings downtown, for instance, can unexpectedly net the village hundreds of thousands of dollars. The sale of the 21-story Vantage apartment building at the beginning of 2018 resulted in tax revenue estimated to be over $800,000 for the village, for example.

Tucker added that it is the board's fiduciary duty to examine every program and every partner agency – such as the Oak Park Housing Center and the Oak Park Economic Development Corporation – every year to find efficiencies. He added that an unexpected pension increase of $600,000 hit the village budget.

"We need to examine why the (levy) increase is happening and perpetuates itself over the coming years," Tucker said. "The current pension hike may or may not be there in future years in terms of that jump."

He noted that while the village is often criticized for the seemingly ever increasing tax burden, the taxing body has reduced its number of full-time employees by roughly 100 people over the last decade. That's roughly 20 to 25 percent of all municipal staff, Tucker noted.

Many of those positions have been eliminated through outsourcing to private companies and temp agencies and through attrition, said Pavlicek.

Moroney noted that the salary increases for police and firefighters is a large driver of the increasing tax burden. The police department is planning to hire 10 additional officers to be fully staffed. Pavlicek noted that police already are paying overtime to existing officers to have enough officers on the streets.

Interim Oak Park Police Chief LaDon Reynolds acknowledged that more staff would reduce the overtime hours paid to cops. "Whether we're down 10 (officers) or five, we're going to provide safety for the community," he said.

Mayor Anan Abu-Taleb said every percentage point of increase to the levy equals about $300,000 more needed from Oak Park taxpayers, so a 3 percent increase is roughly $900,000 needed to pay the tax bill.

Holding the line on police and fire hires would save about $2 million and $800,000, respectively, he said, gaging trustees' interest in exploring cuts in those areas of the budget.

"I'm not suggesting I'm going to recommend this to this body," he said, but noted that reductions in those areas would go a long way toward solving Oak Park's structural tax deficit.

He said it takes about $14 million to run Oak Park Village Hall, outside of public safety costs. "Is there an appetite for this board to address the elephant in the room, which is police and fire and public works (expenses)?" he asked.

Andrews suggested the board instead focus on potential cuts to partner agencies instead, such as the Oak Park Economic Development Corporation, Oak Park Housing Center and the Oak Park Arts Council, to name a few.

"I say we tighten our belt and make cuts here and there," he said.

tim@oakpark.com