Budget may be on track for surplus at end of the year

Budget may be on track for surplus at end of the year
By Bob Seidenberg
City budget revenues were looking “pretty stable, pretty strong,” at the mid-year mark, including some areas that were previously down because of COVID,  the city’s top financial officer told Council members in a presentation at the Aug. 8 City Council meeting.
Revenues tied to economic activity, such as sales tax revenues, are on track with budget estimates, Hitesh Desai, the city’s Chief Financial Officer, told Council members in his budget update.
The city’s portion of the state income tax is trending higher, he  told Council members.
Meanwhile, building permit sales and real estate activity, two areas affected during COVID. are showing  gains.
Revenue from building permits is already at 59% of the budgeted amount, halfway through; and real estate transfer taxes – the tax residents pay on sale of property – up 69%, he said.
Council members are not slated to start discussing the 2023 budget for several weeks. But talk of a property tax hike or staff and program cuts – standard items of discussion in past budgets and especially during Covid – did not make it into the normally cautious official’s presentation.
The city’s share of federal COVID relief funds did not hurt. Members of the current Council took office in 2021 with news that the city would be receiving $43.1 million in American Recovery Plan Act funds, a chunk of money previous Councils did not have.
To date, the city has obligated about $28.5 million of the funds, Desai reported. The figure includes $12.5 million earmarked for the city’s own needs, for equipment replacement and in parking and General Fund operations.
Desai queried Council members about using ARPA funds again for 2023.
Personnel costs will be an issue with all three union contracts – police, fire and public works – to be negotiated later  this year, he said.
A consultant’s report is to be presented to the Council likely next month, he said, “and we don’t know the recommendations, whether to add positions, how many positions, what kind of increase they’re recommending,” he said. t
A few areas are trending lower, including revenue from a telecommunications tax, at 46% of the budgeted amount, as more people eliminate their landlines, Desai told Council members
Recreation program fees are also down, not yet returning to full pre-COVID levels, he said.
Officials are continuing to see low parking revenue from city garages but hope to see a significant increase there with completion of some of the big residential/commercial projects in the next couple of years, he said.
The city ended 2021 with a $17 million operating surplus in the General Fund balance, Desai told Council members.
The city takes some of that out to go in its reserve fund, to have an amount equal to 16.6% of General Fund expenses.
Could surplus boost the reparations fund?
After the presentation, during Council discussion, Council member Devon Reid, 8th Ward, observed that the city’s finances “are pretty healthy, and maybe the healthiest they’ve been in decades, or certainly at least in a decade.”
He asked Desai what he projected the city’s balance would be at the end of the year.
Desai said there are uncertainties with the property tax as well as changes in revenue the city is now receiving, because of inflation.
“I’m absolutely we will end this year in the positive,” he said.
“Thirty five, forty million?” Reid tested him.
Desai said he would go for now with a $5 million operating surplus. 
That could change, however, as some snow events often occur during the last three months of the year, which can be costly in overtime.
Along with that are increases in materials and supplies with inflation, he  said.
“I want to account for that,” he said.
“That’s still encouraging to hear,” Reid said. The previous Council strove just to reach the 16.6% figure that officials recommend for their “rainy day” or reserve fund.
He noted the discussion earlier in the meeting to bolster the city’s housing reparations fund which offers benefits to qualified Black residents for past racial injustices. And, “I think given our healthy city finances … I’m  really hoping  in September this Council consider making a transfer from the General Fund reserves to our Reparations Fund to make sure that our senior citizens who have been approved for reparations – so we’re  not seeing any more of those folks pass away before  they get repaired.”

Council members took no action on the budget, which was presented as an update at the meeting. Officials are planning to propose their budget for 2023 on Oct. 10, posting the document on the city website, cityofevanston.org, Desai said at the meeting.

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