One Evanston City Council member pushed Tuesday night for the city to spend more of its budget reserves, while city staff said at least some of that money can’t be touched.
Ald. Clare Kelly (1st) demanded at a Finance and Budget Committee meeting that staff provide a report showing how much cash is sitting in the city’s 38 budget accounts.
Ald. Jonathan Nieuwsma (4th) replied that staff already provides a monthly report on the city website showing the account balances.
The latest report, as of the end of October, shows nearly $47 million cash in the general fund, nearly $33 million in the American Rescue Plan Act fund and a total of nearly $57 million in the city’s 36 other funds.
The 2023 budget the City Council adopted Monday is expected to trim the general fund reserves to $34.1 million by the end of next year — or 26% of the general fund budget.
The city’s budget policy calls for maintaining general fund reserves of at least 16.67% — or two months of spending — one of the skimpiest reserve levels among area communities.
And the Council is in the midst of deciding how to allocate the last few million of the ARPA money that hasn’t already been committed to projects.
The city hasn’t set a policy for reserves in funds other than the general funds, but $57 million is roughly 20% of all non-general fund spending called for in the 2023 city budget.
Kelly has been urging that the city reduce its reserve balances rather than issue more bonds to fund capital improvement projects.
But the city’s chief financial officer, Hitesh Desai, said money in several funds is restricted to particular uses and can’t be put to other purposes. As an example, he cited the Motor Fuel Tax fund, which contains money received from the state and can only be used for road projects.
Tax increment financing district and special service area funds also have restrictions on their use, he said.
Lara Biggs, the city engineer, said other funds hold money that the city will eventually have to send to the state to cover matching-fund requirements on federally funded capital improvement projects administered through the Illinois Department of Transportation.
Because of severe staffing shortages, Biggs said, IDOT may sometimes wait years to ask for that money, but the city has to provide it promptly whenever IDOT eventually sends a bill.
With advice from the Finance and Budget Committee, the city has so far avoided issuing bonds for this year’s capital improvement projects — funding projects with cash reserves instead — in an effort to minimize borrowing when interest rates are at historically high levels.
Committee Chair David Livingston asked Desai when he anticipates the city will have to issue new bonds.
Desai said that’s subject to many factors — but that despite a several-month delay by the county in issuing second installment property tax bills, the property tax money has started to come in and the city has not had to take out any of the short-term loan funds it had arranged for in an effort to guard against the delay in property tax receipts. So the city’s cash position at the moment looks pretty good.
Livingston suggested that the city’s bond advisor appear at the committee’s next meeting in January to discuss when the city will likely need to finally issue new bonds and what interest rates may look like at that time.