Village Council— Deficit spending raises concerns
- Published: December 25, 2014
At Village Council’s Dec. 15 meeting, leaders expressed concern over the amount of deficit spending in the 2015 Village general fund budget. However, due to the need to move ahead, Council approved the final reading of the budget.
“Melissa and I are both very nervous about this budget,” Village Manager Patti Bates said, referring to the Village Finance Director Melissa Vanzant.
The 2015 Village general fund budget, generally considered a barometer of a town’s fiscal health, includes a year-end deficit of $1,029,680. Because the general fund has a surplus this year of $1,699,736, the Village general fund is projected to end next year with a surplus of $670,056, which is significantly lower than the general fund surplus in recent years.
The larger-than-expected deficit is linked to a transfer of $630,000 from the general fund to the water fund to cover two water-related capital projects, along with operational general fund deficit spending of about $390,000. According to Council President Karen Wintrow, this is the first time in her nine years on Council that the Village has dipped into the general fund to cover expenses that should be covered by the enterprise, or utility, funds, which are intended to be self-sustaining through utility fees.
“Unfortunately the balances in those funds are too low and we need to do two major capital projects,” Wintrow said.
The end-of-year balance in the water department fund this year is $41,980, due to deficit spending this year of about $247,000 in that department. The deficit spending is linked to declining revenues in the water fund, Vanzant has previously said.
However, the Village needs to move ahead with two water projects soon, according to Village leaders. The loop completion water line project in the Antioch College/downtown area will improve fire flow, and needs to progress because the Village stands to lose a $400,000 state grant if the project is delayed, Bates said. The project is estimated to cost about $800,000 in total, with the remaining $405,000 coming from the general fund transfer.
And the Village also needs to start work on constructing a new water plant due to the old plant’s increasing difficulties, Council members have said. The remaining $225,000 to come out of the 2015 general fund surplus covers one-half of the fee of consulting engineers for the initial design, bidding and construction management services for the plant. Council has spent the past two years considering how best to replace or refurbish the Village’s current 50-year-old plant, and recently decided to move ahead with constructing a new plant.
The projected 2015 end of year surplus of $630,000 is about 18 percent of the Village’s 2015 general fund budget, a percentage that is significantly lower than in recent years. Municipalities differ in what is considered a safe minimum surplus, with amounts ranging from 25 percent to 5 percent.
“In 2015 we need a broader discussion of finances,” Council President Karen Wintrow said at Monday’s meeting. “Our budget is not sustainable as it is.”
Other items of Council’s Dec. 15 agenda will be covered in next week’s paper.