Stub Year 2020 Budget: Different Name, Same Great Services (Part 2)

Stub Year 2020 Budget: Different Name, Same Great Services (Part 2)

By Village Manager Phil Kiraly

Phil_KiralyIn my blog last week,
I hope I piqued your interest with some of the more general facts about the Village’s Stub Year 2020 Budget, which provides the roadmap for the Village’s financial position and spending plans for the first (and only!) 10-month fiscal year in the Village’s history. As I mentioned in last week’s spoilers, this week’s blog will share more specific information about the Budget; in particular, I’ll dig deeper into to the Village’s 10-year Community Investment Program (CIP).

To start, I’d like to emphasize that the Stub Year 2020 Budget, like all prior Village budget documents, is a statement of our community values. To ensure that the Village continues providing our residents and business community with the best, most efficient and most effective services, the Village Board and staff will be using the feedback you shared in the Village’s 2019 Community Survey to guide the development of future financial plans, policies and overall operations. Stay tuned!

For those new to the Village’s Budget and budget development process, the Village’s 10-Year Community Investment Program (or “CIP”) provides a guidebook for the next decade as the Village plans for necessary investments in critical infrastructure, vehicles, equipment and technology. Over the next decade, the CIP has identified over $53 million in needed capital and infrastructure investments through 2029; although daunting, the Budget includes a financing plan (comprehensively reviewed with the Village Board annually) to provide a plan to fund these critical projects. 

Coming up in Stub Year 2020, we are planning over $7.5 million in capital and infrastructure investments. These projects are being paid for with a mix of cash from reserves (approximately $2.2 million), bond debt (approximately $4 million), user fees and grants. Here’s a rundown of several major initiatives in the Budget and their impact to you this year: 

  • Water meters and water distribution system investments: This year, we will commence a community-wide replacement of all water meters. This $2.5 million investment has been planned and anticipated, thanks to several studies the Village has conducted throughout the past few years: namely the Water Rate Analysis that was completed in 2017 and the Water Distribution System Analysis completed in 2016. Water meters are essential assets in our water distribution system; unfortunately, the meters currently in service are failing rapidly due to age, resulting in inaccurate water consumption reads. When meters fail, they run too slowly, meaning that you may be underbilled for the water you are using. How is underbilling a problem? Well, underbilling means we are producing more water than we get paid to produce, which is an issue from a Village revenue standpoint. In addition, we’re also investing over $800,000 in new water mains, all tied to the Water Distribution System Analysis I referenced above.
    • Impact to you: The Village is committed to water conservation. These meters will provide better, more accurate information to both the Village and our residents. It will help us to gather correct readings of water use while also allowing you to monitor your use and make changes as needed. Because we planned for this investment, the cost of replacing these meters has been built into the Village’s water rates, which will increase by 8% this year. That means for an example water bill that typically includes 25 units of water consumption per bill will see about a $40 impact annually. As for water mains, replacement ensures that we are more efficiently providing you Glencoe’s great water. Ensuring we invest resources in this most critical aspect of municipal services has been a Village commitment for decades, and these water projects advance that effort.
    • Also coming soon: Last spring, the Village partnered with the Village of Winnetka to hire a consultant to supplement the Water Supply Planning Report. The supplemental analysis, due back to the Village this summer, will help determine the feasibility of potential partnership opportunities in the future – from water production, to water storage, to better emergency interconnects with our neighbors to the south. We look forward to discussing these opportunities with the Glencoe community, ultimately with the goal of ensuring that the water we deliver you remains the highest quality possible. Look for more information later this year.
  • Downtown Investments: As I have reported in past blogs, we’re planning enhancements to Glencoe’s downtown business district and other major amenities, including parking system program improvements (coming this spring), wayfinding signage (coming yet this winter) and the Tudor Court Street and Streetscape Improvement Project (starting around April 1). The goal of these projects is to support our local businesses and attractions. When these organizations thrive, there are multiple benefits to our taxpayers, not the least of which is the broadening of the tax base to non-residents who visit Glencoe. We have enjoyed one of the most vibrant downtowns on the North Shore for the past several years, and we are working to support our businesses – both new and established – by keeping our downtown attractive and inviting. As you’ll recall, the Village’s comprehensive public engagement process led to a fantastic streetscape design; the planned improvements on Tudor Court will support our unique downtown.
    • Impact to you: The Tudor Court project will impact travel and parking in that area until roughly mid-July. We will be working closely with our businesses and Writers Theatre to limit the impacts of this projects, but we appreciate in advance your patience. Funding for the $1.6 million project comes from non-referendum bonds issued this year (which thanks to the Village’s AAA bond rating, came with low interest rate of 2.2%, saving the community real resources as this debt is paid off). Please continue to patronize your favorite Tudor Court businesses during construction!
    • Also coming soon: In the next few months, you’ll see new wayfinding signage going up in our downtown to show available parking, downtown attractions and amenities, while also introducing a new branding campaign for the community. This is the first of a three phased, three-year project that will ultimately see new signage at Glencoe’s gateways and elsewhere throughout town.
  • Sewer Improvements: In the coming decade, we will invest almost $4 million in order to meet Metropolitan Water Reclamation District (MWRD) requirements related to our sanitary sewer system. These unfunded requirements from another government entity seek to limit the negative effects of inflow/infiltration (non-sanitary water flow, like storm water) entering into the sanitary system and overwhelming it during storm events. We will be investing over $200,000 in this initiative this year, with much more coming in future years.
    • Impact to you: To help pay for these investments, sewer rates will increase by 10% on March 1. So, if you regularly are billed for 25 units of usage on your quarterly water/sewer bill, this will mean your annual costs will increase about $11. The positives of a better sanitary sewer system are that that it remains more reliable, not just when you need it most, like preventing backups during storm events, but also every day. Sanitary sewers are often taken for granted, but they serve a critical purpose!
    • Other investments: Are you curious about how the Village replaces vehicles? How we invest in amenities like the Green Bay Trail? Replace sidewalks? Update parking lot lighting? And more? Read all about it in the Village’s CIP.
      • Impact to you: Everything, from squad cars to street lights to sidewalks, has been prioritized to meet the needs of our community and improve the quality of life that we all value about Glencoe.  

Another budget driver: The Stub Year 2020 Budget also addresses factors that are outside of the Village’s control, such as unfunded mandates from other units of government. One area that we often talk about is our required contributions for pensions. This year, the Village is required to significantly increase its actuarily-mandated payments to our Police and Fire Pension Funds; for example, our Police Pension Fund contribution has grown by $361,574 (19%). Overall, our required pension contributions in the past five years have increased by 62%. Even though the Village has been responsible in funding our pension obligations for generations, changes at the State level have increased these contributions dramatically (over 10% of our General Fund budget is now annually designated for this purpose). Of course, making sure our obligations to our employees is met is a top priority and will remain so; however, we are grateful that the State recently passed pension consolidation legislation that will help mitigate these financial impacts to the community in the future. 

Other changes this year: As the Village continues to face an unpredictable legislative environment, we constantly assess Village operations to generate possible cost savings. We also evaluate alternate revenues that can support Village services without increasing the Village’s dependence upon other traditional revenues such as property taxes, the rising levels of which you identified in the 2019 Community Survey as concerning. As I noted last week, the Village Board adopted a new $0.03/gallon motor fuel tax and a new 1% places for eating tax, which apply to both residents and non-residents alike. Initial estimates predict that the places for eating tax may generate approximately $60,000 in new revenue during Stub Year 2020, while the local motor fuel tax may generate as much as $36,000 annually. I’d like to underscore that any new tax revenue raised will be invested back into the Glencoe community through infrastructure investment or other service provision.

Before I sign off, I’d also like to share a sincere “thank you” to our residents and businesses. The Village is a complex organization, and each day, the magnitude of our mission is visible when I see our team out in the community providing services for you. But none of that would be possible without your continued willingness to support the Village’s operations by choosing to live or work here, paying taxes and fees and finally, remaining engaged. Glencoe remains a special place, and it is because of you and your neighbors. Our team is grateful to serve you, and grateful for the trust you place in us each day.

Thanks for taking the time to learn about the Village’s Stub Year 2020 Budget. As always, if you have questions, my door is always open!