Finance Committee of the Village of Wilmette October 3, 2017 at 7:00pm

Present


Bob Bielinski (P) -- Village Board President
Kathy Dodd-- Village Trustee
Joel Kurzman-- Village Trustee
Stephen Leonard-- Village Trustee
Julie Wolf-- Village Trustee
Dan Sullivan-- Village Trustee
Senta Plunkett-- Village Trustee
Timothy Frenzer (VM) —Village Manager
Michael Braiman—Assistant Village Manager
Melinda Malloy (FD)—Finance Director
John Prejner—Assistant Director of Administrative Services


Significant Topics Discussed (2018 Budget):
                                                                                                  
 

• The 2018 Ending Reserve is projected to be 9,721,499. 
  • This is significantly over the recommended reserve of 4,773,600.
  • The Village Manager(VM) explained how this helps Wilmette maintain its AAA rating which is very important in light of the State of Illinois’ finances.

 

• There are two revenue reductions due to action by the State of Illinois
  • One time 10% Local Government Distributive Fund (LGDF) reduction which equates to a loss of $267,000 in revenue which is offset by utilizing reserve funds
    • Melinda Malloy (FD) explained how
  • 2% administration fee on collection of home rule sales tax which will result in an annual $42,000 in loss of revenue

 

• Future Concerns due to action by the State of Illinois
  • The 2-year property tax freeze will be considered again in 2018.
    • The VM thinks this will be a political move tied to either primaries or the 2018 election.
    • VM explained that the Village is part of a consortium of suburban municipalities that actively lobbies against this as well as other legislative issues that would adversely affect Wilmette.
    • VM explained that due to our high reserves, Wilmette would be able to weather a 2-year event easily.  There is a concern if this freeze would be longer than 2 years.
    • Melinda Malloy (FD) explained how the pension will be separately levied from the General Funds.  This is to protect the pension funds from reduction in revenue from the state as pension levies will be excluded from any reductions.  The village will put a budgeted amount into the pension.  If the actuary estimates a lower amount, the money will still stay in the account.  If the actuary says more is needed, money will have to be found in the General Funds.

 

• Revenues 2018
  • The waste disposal service charge will increase.
  • Abandoning of land phone lines reduced utility tax revenues.
    • Sales taxes are up in a large part because of growing ecommerce revenues. Ecommerce revenues more than make up for reductions in in-store purchases. 
    • There was a question as to why the budget does not plan for non-recurring revenues. VM gave the example of the Green Bay Road project whose permit fees were delayed year after year as the project was changed making them unplannable. VM pointed out the deleterious effect of Evanston including non-recurring fees in its budget.

 

• Largest Risk to Revenue - If another recession hits, sales tax revenues and income tax revenues would be expected to decrease.

 

• Non-Recurring Revenues
  • These are based on one-time events such as permits for very large projects.
  • Half of the money goes into the Capital Equipment Replacement Fund (CERF), and half goes into the General Fund Reserves.
  • No big projects are planned for 2018.

 

• 2018 Expenses
  • Moving some employees in house has overall reduced expenses.
  • Commodities are down due to a mild winter and a reserve of salt, which can last around 10 years
  • Other includes hotel tax rebate to the Residence Inn
    • The VM replied that a hotel occupancy tax was created for the one hotel in Wilmette.  This tax will be rebated back to the developer for 10 years or until $3.2 million is rebated. 
    • The FD said that the rebate is 76.9% of any tax collected.  Since opening in 2014 $780,000 has been rebated.  The village has received approximately $240,000.

 

• Pensions
  • See “Future Concerns” above
  • VM says Wilmette pensions are 60% funded.  He mentioned that Highland Park was only 40% funded.

 

• 2018 Capital Improvement Plan
  • New line item - Patching of small sections of streets.  This is not the same as filling pot holes.  Funded with surplus money from street resurfacing projects.
  • Central and Locust reconstruction will happen in 2019 or 2020.  Skokie reconstruction is happening now.
    • Server Room HVAC is being deferred. Joel Kurzman and Kathy Dodd had concerns about this as it was conveyed to them that the needs were critical, and Joel Kurzman wanted to be on the record that he supports funding this. 
    • The VM said that if it becomes an emergency situation it will be fixed and it might also be done using non-recurring funds this year.

 

• Bicycling
  • Wilmette’s portion of the Skokie Valley Trail engineering project is being funded with $25,000. Glenview is the lead on this project.
  • At the urging of the P, the village will fund a master bike plan study in 2018 budgeted at $80,000. Funding is coming from the half of the non-recurring revenue that would normally all go into the reserves.  Reserves will still increase.
    • While Joel Kurzman expressed his preference to take the money from street lamp painting and replacement funds, the VM indicated those funds were necessary for lamps because of lead paint that must be maintained properly.
  • Stephen Leonard expressed concerns about the need for the plan and the cost.
    • Julie Wolf explained that there were many stakeholders involved and other municipalities which would need experts to navigate.
    • Bob Bielinski (P) explained that this a complex design issue which would need experts at the lead versus board members making the decision.
    • Joel Kurzman said that the plan could cost considerably less than $80,000.
    • Julie Wolf explained that to even apply for grants for bicycle lanes, etc., the village needs to have a master plan.
    • The P assured Stephen Leonard that any plan would be bid out and brought to the group for agreement before anything was committed to.
    • Kathy Dodd wanted to make sure the community was behind this as there had been some past friction regarding an east- west route on Wilmette Ave. Joel Kurzman says this is more than an east-west route issue.  For instance, the Skokie Valley Trail could easily connect to Avoca schools with a short spur.Julie Wolf said that an acceptable east-west route would be found.
    • The P said that there was considerable interest in a bike plan.

 

• Engineering Dedicated Revenue
  • The village had decided to maintain enhanced levels of funding of street and sidewalk repairs due to the large reserve.
  • In the future funding issues will need to be addressed.

 

• Tax Levy
  • The P said the tax levy increase is 1/3 in village control and closely managed, while 2/3 out of village control (pensions and debt service).
  • The village successfully kept the tax increase to less than 4%.
    • Kathy Dodd asked why don’t we have a larger percentage increase as it would build up our reserves to protect us from future, unknown state action. The VM said our reserves are already quite large.

 

• Water Fund
  • Water usage has been declining since the 1980’s due to higher efficiency appliances, low flow toilets, change of habits (such as car washing and frequency of sprinkler use), and smaller household size.  The engineer is seeing the curve flattening out suggesting we are reaching a plateau.

 

• Water Rate
  • The rate will increase due to capital improvements.
  • Through user fees, Glenview will help pay for improvements and equipment depreciation. 
  • Rate increases are used to pay off bonds.
  • Compared to other “water-producing” municipalities, Wilmette does not charge so little that maintenance projects cannot be completed.
  • There was concern that the increased water rate might eliminate residents’ savings from more efficient usage. The VM said the increased rate will not offset savings from greener choices. An engineer pointed out that even if residents use less water, the pipes still have to be maintained.

 

• Water Fund Reserve
  • Water main replacement to begin in 2020 or 2021 with costs of $1.3M.
  • Future years will have to address funding the reserve.

 

• Sewer Fund
  • There’s a backlog of money in place for sewer re-linings because of a hold-up at the state level in low interest loans and a medical emergency leave by the only Village employee who handles this.
  • The money from previous years was rolled into this year’s budget.
  • An additional $300,000 will be added to this number this year to reline Central Avenue before it is reconstructed.
    • Joel Kurzman had a question about the high cost for one street.
      • The VM explained that it was due to the length—nearly a mile is to be relined. 
    • Joel Kurzman asked why Central Avenue was important this year if you didn’t need to tear up a street to reline.  Brigitte Berger, Engineering & Public Works Director, said that it is always prudent to do it before reconstruction as there could be issues with the automated relining system. Joel Kurzman then asked why Locust was not being relined this year as it is being reconstructed. Brigitte Berger replied that all are scoped with a camera to look at the condition of a sewer before work is decided upon and therefore Locust must be in good condition.
      
      

Budget ordinance will be introduced at November 14th Village Board meeting and voted on at the November 28th Village Board meeting.  The tax levy ordinance will be introduced at the November 28th Village Board meeting and voted on at the December 12th Village Board meeting
Next Finance Committee meeting:        November 27, 2017—Discussion on Sewers
 
Observer:      Sarah Titterton                         Meeting Length: 2 hours 45 minutes