Department heads have been put on notice – they should expect substantial cuts as the village council attempts to wean the tax rate down from an .
In an exhaustive four-hour meeting Wednesday, several council members said they're eyeing a more palatable figure – ranging from a 4 percent increase or above, but stopping well short of the initial projection of 7.6 percent, which would hit the average homeowner assessed at $794,000 with a $262 hike.
According to CFO Steve Sanzari, the village was slammed with an increase in expenditures worth $1.3 million, as well as a shortfall in revenue worth over $800,000. When factoring in exceptions to the 2 percent local tax cap levy (like storms and health care costs), the village arrives at the first-pass figure of 7.57 percent.
Budgeting down to around 4 percent would require significant cuts, officials said.
"One tax point is $661,041. If you want to reduce the budget by one tax point, $661,000, that would bring you from a tax increase of 5.47 from 7.57, or $196," Sanzari explained in taxpayer dollars. "If you dropped it two tax points, you would have a tax increase rate of 3.047 percent," he said, adding it's based on average assessed values.
The question becomes if layoffs will be necessary given the financial picture.
"Salaries and wages, reserves for uncollected taxes, and emergency apropriations for 2012 – those three items make up for about 73 percent of the operating budget," said Deputy Mayor Tom Riche.
"Statutorially, or contractually, I think we start at about 4 percent," he added. "That's not to say we can't stop at 5, or 4-and-half or 4-and-three-quarters. But I think we start at four. I never anticipated 7.6."
Council members all say they remain steadfast in dropping the number, though they're not in agreement on the methodology.
Aronsohn calls for new budget process, is denied
Councilman Paul Aronsohn said the village's budgeting process is "backwards". Instead of starting from a projected 7.6 percent tax increase and working down, officials should employ a method of "zero-based budgeting," as is done in the private sector, he said.
"It's much harder to get down than to start at zero and look at the tradeoffs," he said. "We've got three months left. Let's sit down and look at what we can absorb and what can't we. What do we displace? Let us make those hard choices. If we need to go for a 1 percent increase or a 2 percent increase, let's do it consciously."
The councilman, who , found no support from his fellow council members.
Mayor Killion replied that it was too late in the budgeting process to make that transition, one that would be laborious and, according to his research (citing Wikipedia), greatly flawed given the differences between public and private sectors. He instead suggested a "hybrid" approach by going line item by line item and having department heads justify any proposed increases.
Layoffs likely if tax hike is under 4 percent
Deputy Mayor Tom Riche said a "zero approach" and realizing no tax increase would have to mean layoffs – likely in police and fire – one Village Manager Ken Gabbert said would mirror 2010, a period that saw over 30 workers retire or receive pink slips. Riche did, however, implore officials to take a harder look at the ballooning overtime rates across departments. Some jumped several hundred thousand dollars, according to officials.
After presentations and requests by various department heads Wednesday night, Councilman Steve Wellinghorst said according to his "unscientific" figures, about $400,000 could already potentially be sliced.
For Councilwoman Bernadette Walsh, the village should tread carefully where it cuts. "If we start cutting services we will go into a tailspin," she said.
Killion said there will be no excuses from department heads – all of whom – not staying within their budgets in 2012.
"Saying 'budget constraints' is not going to fly," the mayor warned of increases.
Council refuses to release preliminary budget to public
Though officials seemed pleased with the progress made Wednesday, there remained questions as to the public's role in the ongoing discussions.
Aronsohn lobbied officials to make the preliminary budget documents available to the media and public to foster "better understanding" and "transparency".
"We're having a public meeting discussing these numbers in detail but we're not making them available on paper," Aronsohn said, calling it "bizzarre" and adding that Mayor Keith Killion last week expressed concern media had misinterpreted the numbers but isn't "facilitating" understanding by releasing documents.
"I'm not in favor of releasing simply because it's a work in progress," rebutted Killion. "I see the reaction of residents when you release a preliminary first-pass of 7.5, they take it as gospel. You release these numbers and they change...It really leads them [the residents] to be misinformed."
In the "spirit of transparency," Killion said they'd eventually release the documents but gave no timetable. A budget is likely to be introduced in June.
Candidate Al Pucciarelli worries about impact of budget process
According to council candidate , who was joined by fellow candidates and on Wednesday, the approach of withholding information isn't a good one.
"Certain salary adjustments, including retroactive adjustments, coupled with an increase of this magnitude, has made the public very suspicious of the process," Pucciarelli said in a telephone conversation Thursday morning.
Commenting he found the budget meeting "difficult to follow," Pucciarelli noted some numbers are already out there irking the public.
According to Pucciarelli, there's a concern that although the council is working to lower the tax hit, the 7.6 number floating will spur residents to file more tax appeals and diminish the tax base even further.
"This has the makings of a perfect storm," he said, agreeing with Aronsohn's call for a zero-based budget though he conceded it may not be as fruitful as it would be in the private sector.
"We have to do something different if we're going to make any substantial change on the expense side," he said.