The City of Evanston’s budget crunch became a bit clearer this week as a city panel went over the latest budget numbers.
Here’s how the numbers break down. (No worries, we’ll do the math for you.)
Start with a $57.9 million surplus.
Evanston ended 2022 with its best-looking financial position in many years — a general fund budget surplus of $57.9 million — generated in large part by federal pandemic aid and payroll savings from vacant positions.
That’s way above the roughly $20 million in general fund reserves needed to meet the City Council’s reserve policy that calls for keeping a minimum of two months of general fund expenses on hand.
But in adopting the 2023 budget last November, the Council committed $10.1 million of those reserves to cover anticipated expense increases in this year’s budget.
Now it’s a $47.9 million surplus.
Staff reports at Wednesday’s meeting of the Finance and Budget Committee noted that so far this year the Council has approved $3 million in unbudgeted spending to cover wage increases in fire and police union contracts and $2.4 million to cover inflation-driven cost increases in three capital improvement projects.
Now it’s $42.5 million
The Council has yet to settle on a new contract with the city’s largest union — AFSCME — but it’s expected, like the other union agreements, to cost more than was budgeted. Let’s plug in another $3 million — the same as the added cost of the other contracts — to cover that.
Council members have said they really, truly want to start down the multi-year path to fully funding the city’s police and fire pensions. Figures from the city’s pension actuary presented to the committee Wednesday suggest that will add somewhere around $6.5 million in additional spending to the budget. (Fully funding the pensions would result in major savings down the road — but not until sometime around 2040.)
And city staff — based on expectations for inflation-driven price hikes for capital improvement projects budgeted for this year but not yet contracted out — are predicting that the cost for those projects will run about $2.4 million more than budgeted.
Now the surplus is down to $30.5 million
The budget committee has discussed the idea of saving money, in the current high interest rate climate, by spending cash rather than issuing general obligation bonds for the year’s capital projects. It would take about $10 million to completely avoid issuing those bonds.
And two other city funds are very short on reserves. City staff has proposed transfers of $4 million to the insurance fund and $3 million to the parking fund.
All that would take the surplus down to $13.5 million
And at that point the surplus is way under the two-month, or 16.67% of annual general fund reserve target set by City Council — which would wipe out hopes of achieving another budgetary goal — raising the reserve level to 20% of general fund spending.
Budget and Finance committee members were told Wednesday that the latest projections of revenue and expenses for 2023 show revenue increases exceeding expense increases by about $1 million — but that’s not nearly enough to fund the full wish list of budget goals.
The committee will try to get closer to having some more specific recommendations for the full City Council during a meeting next month.
How about rebating the surplus to over-taxes property owners?
Thank you Gary. Refunding tax payers is long overdue.
Some of the funds should go to the under funded pension plans . How about $20million.
Thank you for your wonderfully descriptive assessment of our tenuous
“surplus”. It made for much clarity, especially with my waning arithmetic skills.
One request: please refrain from the use of acronyms, ie, AFSCME. Please spell out.
AFSCME is the American Federation of State, County and Municipal Employees.
Question to the author: without the federal pandemic aid, how would Evanston have ended the year?
That’s a little hard to say, because the pandemic money paid for some spending that might not have happened if the free money hadn’t been available, but the city received $43M in ARPA funds spread over two years. And, of course, the pandemic altered city spending in a variety of other ways — increasing some expenses and reducing some revenue streams, but also leading to some expense reductions as city officials responded to the anticipated revenue losses, losses that generally turned out to be less severe and less long-lasting than anticipated.
Overall, I think it is fair to say that the net impact of the federal pandemic aid was to substantially increase the city’s year end 2022 budget surplus.
I understand the appeal of saying the surplus should be refunded to taxpayers, but we have a genuine pension shortfall that we owe the brave men and women that protect us from crime and disaster. We should put all of the surplus into the pension fund and not one penny towards Biss’s or Reid’s latest hairbrained schemes. Putting the pension fund right will pay us all dividends for years.
I agree with your point. Let’s put the money we have promised into our pension fund.
Seems the surplus is mostly a one time situation due to Covid. Seems like the council is like I was as a kid with a few unexpected coins in my pocket. Mom would say the money was burning a hole in my pocket. It was and soon was gone. I’m afraid this council will soon find Mom was right
On 05/10/23 my wife was given a parking ticket citation 458414054 for 75 dollars. She was going to her eye doctor for an emergency to her right eye and needed to get to the Doctor’s office as soon as possible. As her husband, I feel this was a pound of flesh fine to a senior citizen trying to balance your city expenses. So it is our family choice to boycott Evanston for the rest of 2023. We will not buy any item or go to any restaurant in Evanston until 2024 and maybe not even then. Your sales tax loss for three days has been 3,341 dollars spent 5/12 at Menard in Niles, moving the family Mother’s day party for eleven from the Orrington to Lake Forrest. The city of Evanston will lose more in sales tax revenue from our extended family than the 75 dollar ticket. Please adjust you budget.
Hey Joseph, great points made with your boycott decision, I like it!
An unintended additional savings for you from this boycott is that you won’t have to pay Evanston’s exorbitant aggressive panhandling fees we all face at the entrance of most of our retail establishments.
You and your family are also much safer spending your money in Niles, Lake Forest, and beyond!!
Amazing all of the knock on benefits of your boycott! Thanks for sharing!
PAY DOWN DEBT!
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