It's Budget Time!

By Village Manager Phil Kiraly

Each day, our team of approximately 100 Village staff members works tirelessly to provide many excellent services for the Glencoe community. This involves a lot of day-to-day management and boots on the ground efforts, as well as both proactive and reactive planning and action. Whether we are treating water at our lakefront water plant, serving on a fire shift, reviewing building plans, overseeing a sidewalk replacement project, calculating utility bills or hanging holiday lights throughout the downtown, our work can’t stop: We know you rely on us.

A big part of how we uphold your reliable, responsive and effective local government is through the careful development of the Village’s annual budget. Glencoe begins this process several months before the budget is approved in December, and the efforts we undertake ensure that the resources are available to meet the needs of our community. So far, the Village Board and staff have reviewed the Village’s comprehensive financial policies, engaged around the Village’s five-year Financial Forecast that helps to guide our planning process and considered important long-range plans, such as how to best fund our pension obligations today and in the future. Staff has also developed operating and capital budget requests, prioritized using the Village’s policy documents, and assembled our draft Calendar Year 2022 budget document. It’s a process that appropriately takes many hours and requires careful consideration.

Today, I’m pleased to share the Village’s draft Calendar Year 2022 budget. This document will be discussed by the Village Board at their Finance Committee meetings on November 16 and 18. Both public meetings will be held virtually via Zoom, and we encourage community engagement in these discussions. Zoom meeting information will be posted on the Village’s website by Friday, November 12.

This draft budget focuses on working through a cautious COVID-19 recovery and, like every year, remaining attentive to dedicating the Village’s finite resources where they are needed most. Our financial picture has significantly improved from one year ago. Revenues from sales tax and various state-shared taxes through the Local Government Distributive Fund (LGDF) have consistently recovered, as has building permit activity. Our downtown is vibrant and busy, undoubtedly as a result of our community’s tremendous support for Glencoe’s incredible small businesses. Shopping local truly does help our community!

The Board’s cautious spending cuts and budgetary restraint during the pandemic certainly contributed to our solid financial footing today. These actions have been bolstered by new resources from the State and Federal governments that are helping fund our community infrastructure improvements. (For instance, American Recovery Plan Act, or ARPA, funds received from the Federal government will fund $1.2 million in water main replacements through 2022). The first band of voter-approved resources from the $10 million referendum in April 2021 will also be put to work this year, as will aggregated Motor Fuel Tax resources which are used for street resurfacing. In total, the Village is proposing over $9.2 million in infrastructure improvements and equipment replacements for 2022. All the financial resources needed for these improvements are already available.

A few other budget facts:

• Absent voter-authorized debt service, the Village’s property tax levy is expected to increase by only 1.4%, from $10,798,036 to $11,037,485. This is the Village’s largest revenue stream that funds a significant portion of our government’s day-to-day functions. Last year’s increase was 2.3%.
• Pension funding remains a significant portion of our budget due to statutorily-mandated pension requirements (over 10%, or $3,147,634). Thanks to the Village’s excellent investment returns, however, our total responsibility will be reduced by $90,000 this year.
• Water rates are proposed to increase by 6.5% and sewer rates by 3%, the lowest increases for these important revenues in five years. Back in 2017, the Village Board approved a 10-year rate analysis that included annual increases to pay for critical water system infrastructure improvements. Thanks to ARPA resources, as well as strong utility revenues, water rate increases are projected to slow slightly from the plan.
• Building permits, vehicle licenses and all other fees, fines and rates are proposed to remain flat in 2022.

We are also focused on the inflationary pressures that are present in the local, regional and national economies and how they impact us. Our budget reflects some of that pressure, especially in commodity and equipment costs that are increasing everywhere.

This step in the budget process is somewhere in the middle – as I noted, the Finance Committee meetings on November 16 and 18 will include detailed presentations by staff and discussion by the Board. At the regular November 18 Village Board meeting, the Board will hold its annual tax levy public hearing. Considering any changes that may be made in November, the Board will consider the final Calendar Year 2022 Budget document and tax levy during their December 16 meeting.

If you have questions about the draft budget, please reach out to me (pkiraly@villageofglencoe.org) or Finance Director Nikki Larson (nlarson@villageofglencoe.org). We will share your questions with the Village Board.

As always, thank you for reading, and thanks for your engagement in your local government. We are here to serve and remain grateful for your support through these difficult times.