Council holds 2023 budget work sessions

• By Cheryl Durgans
• Published: December 11, 2022

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The News will feature articles about ongoing Village Council budget discussions in upcoming issues.

Since late October, Village Council members Carmen Lee, Marianne MacQueen, Gavin DeVore Leonard, Kevin Stokes and Brian Housh have engaged in a series of work sessions centering on the 2023 Village budget. These discussions have involved staff, including Village Manager Josué Salmerón and Public Works Director Johnnie Burns.

In a budget meeting on Thursday, Oct. 27, Council made it clear that their focus was on infrastructure and labor force improvements. A looming recession forecast by many economists; continuing inflation challenges, including the rising costs of materials; supply line issues; and labor issues all coupled with a deteriorating infrastructure, means Village Council will — according to Council President Housh — have to make some tough budget decisions for 2023.

In a presentation to Council members Salmerón said that during 2022, the Village was able to make improvements to sanitation and incremental progress on the electrical grid.

“There’s so much great work that we’ve done with limited resources,” he said.

Salmerón also said a cash infusion through the American Recovery Act of $392,000 has helped the Village maintain its cash reserves to a certain extent despite having to use some of the reserves in the 2022 budget. He said the extra cash helped plug holes from 2020 income tax losses  that occurred because of the COVID-19 pandemic.

However, that cash infusion will not be available to the Village in 2023.

“We don’t have that going into 2023. We’ve also got these big economic forces that there’s very little that we can do about it,” he said. “Primarily, inflation’s been over 8%. It’s been there for the last couple months and looks like it’s going to remain there for a while. Interest rates are rising, we’re seeing major challenges in the labor market.”

The Village is protected from surging electric rates over the next couple of years. Salmerón said fixed rates negotiated by the Village will prevent a significant increase in costs.

Village income tax revenue has bounced back from 2020 and is holding steady. “We’ve recovered. We’re back at over $1.8 million in income taxes, and with the growth that we’re seeing at Cresco, we’ll probably be at $1.9 million,” Salmerón said.

However, because of a looming recession, income tax revenue fluctuations remain the biggest risk. According to Salmerón, it is mainly because during a recession, people could lose their jobs.

2023 budget process

This year, Council requested that Salmerón submit a budget draft that is not balanced in an effort to gain a better snapshot of financial needs of the Village.

“I think we’re trying to really understand what we want to do, especially around infrastructure, but that also involves the public safety budget and some of the other areas. I expect we’re going to have to have difficult conversations,” Housh said.

The draft submitted to Council for review is a draft without the cuts and exceeds a balanced budget by $2 million. Salmerón told Council that a balanced budget is procedural and is a matter of getting the numbers to match up.

“Typically, that’s not what I send to Council. I’d like to send you as balanced a budget as possible. There’s a $2 million cut that needs to happen. Otherwise, we need to dip into our cash reserves,” he said.

Salmerón said that the Village will go into 2023 with around 48% in cash reserves.

“That’s a very healthy position to be in. We don’t have a formalized policy on what our cash reserve is, but the best practice is a 90-day reserve, that’s about a 30 percent cash reserve. We’re 48% — that’s almost six months, so we are in a good position. If we need to dip into cash reserves, we have some cash reserves,” he said.

Salméron told Council that overall revenue is projected to be $3,797,000. This includes the $392,000 received through the American Recovery Act, and income from fines, licenses, permits and taxes from transient guest lodging, rent and property tax along with income tax. In 2021, Village revenue was $3,683,000.

MacQueen asked, if given the need to prioritize infrastructure, should Council be looking at options to bring in more than the $2 million needed to balance the budget.

“Does that mean that we should not only be looking at $2 million, but even more so that we can move some money from the general fund into the enterprise funds that are in need? Or are we going to be looking at those enterprise needs such as getting bonds or going into debt in some way to do capital improvements?” she said.

According to Housh, Council will be looking at a number of options.

“It’s a combination of all those things.  We have to look at where we can cut and where we prioritize investments. We also have to consider bonds as a way to finance some of the work,” he said.

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