After years of mostly tight budgets, Evanston council members this summer are faced with the politically pleasant task of deciding how much of an anticipated budget surplus they should spend.
Pandemic austerity measures designed by former City Manager Erika Storlie, the gift of $43 million in federal American Rescue Plan Act money, a growing list of vacant city staff positions and a faster than anticipated recovery of city tax revenues from the pandemic have all played a role in the flush financial forecast.
Chief Financial Officer Hitesh Desai says it now appears the city could end 2022 with $8 million to $10 million in surplus general fund revenue — beyond the two months worth of general fund spending that City Council policy directs the city to keep on hand.
That’s a dramatic contrast to recent years when the city generally fell short of hitting its general fund reserve target.
Tuesday night the Finance and Budget Committee voted to recommend that — rather than raising refuse rates to make the solid waste fund self supporting — the city should transfer $1 million from the general fund to cover the shortfall next year.
And some council members have even bigger transfers in mind. Ald. Devon Reid (8th) has proposed shifting as much as $5 million from the general fund to the reparations fund to speed payments to black residents whose aid is being delayed because of lower-than-anticipated revenue from the cannabis tax that was intended to fund the reparations program.
Several alders have also said they want to avoid any increase in the city’s property tax levy in the 2023 budget.
Perhaps somewhat darkening the party mood is the reality that all the city’s union contracts expire at the end of this year — and with inflation running at its highest level in decades — the city can anticipate union demands for substantially greater pay hikes than what were negotiated in the current contracts.
And the city is soon scheduled to receive a consultant’s report on its employee compensation and staffing levels — amid a theory that the city’s staffing shortages are at least in part attributable to salary levels that aren’t competitive those of other nearby communities.
Then there’s the question of the investment returns on city pension funds.
The Wall Street Journal reported Tuesday that public pension funds lost a median 7.9% in the fiscal year ended June 30 — their worst performance since 2009.
Lower investment returns mean the city will have to kick in more money to the still underfunded pension plans.
But Desai says that probably won’t impact the city for another year.
The city, he said, will have to base its pension contributions for 2023 on how the pension funds performed during calendar year 2021. And, Desai, notes, the markets were doing quite well last year.
Our taxes are not paid in order to facilitate giveaways and spending orgies.
If there is a surplus, out it in the bank in the inevitable case the future is not as rosy as the present.
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