Evanston City Manager Wally Bobkiewicz says the city is facing revenue shortfalls and expense increases that could leave it with a general fund budget deficit of more than $5 million this year — even with nearly $2.5 million in spending cuts already under consideration.
In a memo to aldermen to be discussed at Monday’s City Council meeting, Bobkiewicz and Assistant City Manager Marty Lyons say general tax revenues driven by the economy have all been lower than projected this year.
In addition, the Police, Fire and Parks departments are all running over budget because of service demands and personnel issues.
The projected shortfalls, after planned savings, still range from about 2.5 percent to nearly 5 percent of total general fund spending — which was budgeted for $118.8 million this year.
The biggest revenue shortfall — and among the most difficult to predict — is in building permit income. It had initially been budgted at $9.2 million for the year. But officials think it now will fall somewhere between $4.5 million and $6.5 million.
Income tax revenue is now expected to be 5 percent to 10 percent below budget and sales tax down 7 percent to 12 percent because of the state economy.
And utility tax revenue may be down 20 percent to 46 percent — depending on whether there’s a repeat of last winter’s warmer weather late this year.
City officials fear that if they can’t get the general fund balance back up to the two-months reserve level set by Council policy it is likely to lead to a downgrade by rating services which would increase the city’s borrowing costs.
Any budget deficit this year would send that fund balance in the wrong direction.
Bobkiewicz says city staff is considering proposing a range of ideas for increasing revenue — including raising parking ticket fines and increasing the gasoline, liquor and home rule sales taxes.
But those changes, at the levels being considered would add less than a million dollars to revenue for this year.
Bobkiewicz says that after getting discussion of the issue started on Monday, staff will return to the City Council with potential solutions for closing the deficit at its July 24 meeting.