Finance Committee

Finance Committee Meeting Council Chambers February 17, 2016 8:00 a.m. Call To Order: Meeting opened at 8:08 am Roll Call: Finance Director Neukirch called the roll for Committee members. Committee Members Present: Chairman LoVerde, Bob Callero, John Johann, Paul Nielson and Al Weel Committee Members Absent: None Village Staff Present: Village Manager Vinezeano, Finance Director Neukirch, Assistant Finance Director Nannini and representatives from all Village departments. Approval of Minutes: The minutes from the January 20, 2016 Finance Committee meeting were up for approval, motion made and all concurred. Accounts Payable Approval: The approval of the Accounts Payable registers for 1/15, 1/22, 1/29 and 2/5 were up for approval, motion made and all concurred. New Business FY 17 Draft Budget Review: Chairman LoVerde opened with comments where he thanked the Village staff for their hard work to this point in the budget process and discussed the critical budget process and how this budget provides for things such as personnel, important programs, capital projects and pension funding. He also spoke to the threat of decreased revenues from the State of Illinois and the actual revenue losses the Village is currently experiencing. Chairman LoVerde also stressed the importance of economic development and remaining fiscally responsible. Village Manager Vinezeano followed with opening comments to the presentation where he also addressed the threat of reduced revenue from the State and how this budget provides for pension funding, personnel expenses, strategic infrastructure funding and the ongoing fulfillment of the principles outlined in the Village’s 2030 plan. Vinezeano also gave an overview of General Fund deficit and the overall reductions that have been made to this point during and after a series of meetings with all of the Village’s departments. Vinezeano stressed that this process is a team effort between the staff, Finance Committee and Village Board. Finance Director Neukirch and Village Manager Vinezeano gave a presentation (attachment 1) to the Committee concerning the status of the FY 2017 draft budget and responded to questions from the Committee throughout the presentation. The Committee reviewed and discussed the budget timeline, Economic Enhancement Committee highlights, the General Funds original requests, factors impacting budget requests, changes made to the original requests, and options to help reduce the deficit in the General Fund. The major issues facing each of the other funds were also discussed. Representatives from the Village departments attended the meeting and some answered various questions from the Committee during the meeting as well. Staff will provide the Committee with the dollar values associated with the Economic Enhancement Committee items discussed A motion was made and all concurred to cancel the Finance Committee scheduled for Friday, February 19, 2016. Other Business: None Public Comment: None . Executive Session: None Return From Executive Session: None Adjournment: Motion to adjourn was made and all concurred at 10:24 am. Prepared by Scot Neukirch on 2/18/2016  Budget Timeline  General Fund  Village Economic Enhancement Items  Water Fund  Major Impacts on FY 17  Other Funds Budget:  Capital Projects  Pensions  Balancing Options  Revenue Reduction  Payroll for the Village Board  November  Staff began formal planning for upcoming budget year  December-Mid January  Staff entered requests in budget system  January  Finance: Reviewed budget entries Made preliminary inquiries Developed the draft budget  Last week in January  Staff met with the Village Manager, Asst Village Manager and Finance to discuss budget requests General Fund deficit was reduced by $6.2 million during this step  February  Revised the preliminary draft document with changes resulting from departmental meetings.  Meet with Finance Committee on February 17 & 19 to discuss the budget.  March/April  Meet with entire Village Board for 3 scheduled workshops to get input and direction from the Board.  March 14, 2016  March 16, 2016  March 23, 2016 (if necessary)  Beginning of April  Prepare proposed budget based on Board direction received.  Available for residents to review on website, library and front counter  End of April  Statutorily required Public Hearing for resident comment on the proposed budget as part of the regularly scheduled Board Meeting  May  Village Board votes on appropriation ordinance  Tax increment financing(TIF)  Fire alarm monitoring  Donations/sponsorship  Illinois Debt Recovery Program  Water bill delinquency program  Business license revocation for delinquent fees/taxes  Corporate rewards program  Sales tax and utility tax in-house monitoring  Staff’s annual evaluation of fees  Grants  Ambulance fee adjustment  Amusement tax  Appeals court fee  Bus shelter & bench ads  Festival permits  Local motor fuel tax increase  Fitness program fee increase  Water rate increase  Water meter replacement program  Video gaming  Water and sewer line insurance program  Utilization of interns/volunteers  Discontinuation of vehicle sticker lock box  Building automation – thermostat reduction at night  Energy efficiency programs  Retirees transitioned to a separate insurance plan  Privatization of branch collection  Department staffing reviews  Paperless programs  Intergovernmental collaboration  Green fleet initiative  Leak detection program  Municipal Partnering Initiative (MPI)  Regional water supply  The Pension Funds are governed by a Board that is independent from the Village.  The Funds have their own financial advisor and attorney.  An actuary calculates on an annual basis what the Village needs to contribute to the Fund to be compliant with state statutes. p. 239 & p. 244  Currently the Police Pension Fund is 42% funded and the Fire Pension Fund is 45% funded  Total unfunded liability of $77.5 million  The FY 17 budgeted contribution of $6.3 million is 100% of the actuarial recommendation (which will provide more level payments until 2040).  For FY 17, the budgeted contribution is $1.3 million higher than the statutorily required minimum contribution.  The current property tax levy ($3,231,000) covers 51% of the full contribution from the General Fund to the Pension Funds in FY 17.  $2,049,000 is budgeted to be supported by a transfer of reserves from the General Fund  $837,000 will be supported by the ¼% sales tax increase.  $160,000 is being supported by post office rent  FY 17 total existing debt (principal & interest): $12,321,000  Debt is paid by a mix of TIF increment, sales tax, water sales and property tax  Of the existing debt, $2,866,000 will be paid during FY 17.  The next issue to be retired is 2012 installment loan in 2016 and the 2010 GO issue for the Police Department construction at the end of calendar 2017  Budgeted additional debt in FY 17:  Installment loan for vehicles in the Automotive Fund  IEPA loan for the Cleveland storm water project  25% budgeted reduction in Income Tax is currently included in the budget.  Budgeted loss of $750,000  Loss of the Niles OTB  Budgeted loss of $250,000  Reduction in police department revenues  Budgeted loss of $165,000  Accounts 1115-1256, 1257, 1258, 1259  Increased court fines and ticket processing  Total FY 17 payroll (wages, OT, taxes, benefits) : $48.2 million  Total FY 16 payroll is projected at $46.2 million  Budgeted 2.5% COLA for FY 17  Personnel requests will be discussed with the Village Board in executive session at the first budget workshop.  Pension Funding  2030 Comprehensive Plan  Storm Water Relief Program  Matrix Study (streets, sewers, watermains, staffing)  Leaning Tower Rehab  Multi Modal Plan  Firehouse 3 rehab  Environmental Action Plan  Wayfinding Signage Implementation 73%  Combination of the following:  Additional budget request reductions  Utilization of reserves  New/Increases to revenues  Draft budget includes a 5% water rate increase  Chicago expected to pass up to a 5% increase in June  Current and upcoming infrastructure requirements:  Storm Water Relief Program  Water main and sewer main replacement  Matrix Study suggests accelerating watermain and sewer line replacement  Switching water supplier  Potentially significant infrastructure requirements  9101 Greenwood purchase and maintenance costs  Village is losing its largest water customer (Aqua) in 2020  The Village is researching possible alternatives to Chicago  Staff is looking to reduce its water loss percentage  Leak detection services  Meter replacement program  Issuing debt to help manage large expense payments  Purchase of 9101 Greenwood financing options:  Issue GO debt  Would require this issue to be comingled with another issue since $2.6 million is pretty small of an amount to issue GO debt on its own.  Use ¼% sales tax to pay cost of issuance fees, annual debt & interest payments over 20 years  Borrow from the General Fund  Would save on issuance costs and the Village could choose any interest rate it would like, if any.  Use ¼% sales tax to pay the annual debt payments to the General Fund over 10 years.  Take the $2.6 million out of Water Fund reserves  Would save on issuance costs and interest costs  The Water Fund currently has the reserves available  Would keep more ¼% sales tax available on an annual basis for pensions or other storm water projects  Automotive Fund (p. 161)  Decreased contribution from other departments to help the General Fund in FY 17  Installment loan option will be utilized in FY 17 to pay for new squad cars and a vactor truck. Last payments on a previous installment loan will be made in FY 17.  Motor Fuel Fund (p. 249)  Reserves are being utilized in FY 17 to help address infrastructure needs.  This option will diminish in future years.  Capital Projects Fund (p. 295)  Two new special services added  Nordica SSA  Chesterfield SSA  TIF Funds (p. 207)  TIFs are scheduled to pay for:  Existing debt service  Fire Station 3 rehab  Leaning Tower rehab  Milwaukee TIF has been divided in to 3 departments  Harlem, Dempster & Oakton  Family Fitness (p. 89)  Subsidy of $366,000 from the General Fund to support operations in FY 17  Pool lights and dry cooler pipe repairs  Street & Bridge Fund (p. 257)  Drawing down reserves to pay for alley improvements  Seizure Funds (p. 271-293)  If revenue is received it can be used for eligible expenses  Municipal Waste (p. 309)  A property tax allocation along with various fees cover the associated waster removal expenses.  Risk Management (p. 313)  Annual liability and workers compensation costs for the Village  General Fund (4,225,766) Original Deficit (4,184,790) Adjusted Deficit Impact on deficit Budget Reduces Deficit Village Dept Acct Amount (Increases Deficit) Description Board Recommended changes since document created 1540 3370 0 (4,000) Add Shop local expense Add to budget 1020 3070 0 (99) Add Crain Chicago Business expense Add to budget 1115 1230 875,000 40,000 Increase Ambulance Fee revenue by 8% Add to budget Increase Cleveland Crosswalk grant revenue from $1,000 1115 1410 1,000 2,075 to $3,075 Add to budget Remove or Keep Draws on Reserves in Deficit mltpl 2705 (2,049,086) Pension Contribution of Prior Years' Surplus Keep in deficit mltpl 2999 (365,909) Fitness Center Deficit Keep in deficit Keep, Add or Remove From Expense Options Budget Reduce Storm Water Relief Program Cost Sharing 5060 3370 100,000 Program ? 6120 3820 60,000 1997 3/4 Ton Van ? 1310 3370 42,500 Regional Crime Laboratory ? 1010 3610 18,000 Historical Society Architectural Review ? 1540 3050 16,500 Window banners on vacancies ? 1220 3820 8,000 Stair Chair Pro ? 1070 3040 2,800 Teen Center Over Night Lock In ? 1530 3050 2,500 Comprehensive Plan Amendment ? 1321 3820 0 Motorola radios for Police Department ? Keep, Add or Remove From Revenue Options Budget 1115 1023 624,000 Increase Local MFT Tax (currently 2.5 cents per gallon) 2.5 1115 1045 2,279,930 State 25% decrease to income tax Keep in budget 1115 0 Amusement Tax (each 1% equals about $30,000) ? Keep, Add or Personnel Requests Remove From Budget various Personnel Requests (executive session) ? Keep, Add or Other Recommendations Remove From Budget ? ? ? ? ? ? ?  Impact on deficit Budget Reduces Deficit Village Dept Acct Amount (Increases Deficit) Description Board Keep, Add or Other Fund Items Remove From Budget 2310 3810 380,000 Alley behind 7300 block of Harlem ($90,000) ? 5030 3610 78,500 Watermain Valve Exercising Program ? 5040 3370 22,000 Sewer Rodding Rebate Program ? Keep, Add or Remove From Revenue Items Budget 5015 1360 16,491,190 0 Water rate increase 5% Keep, Add or Other Recommendations Remove From Budget ? ? ? ? ?