City Manager Julia Carroll say Evanston’s expenses are rising faster than its revenue. Without adjustments, she says, the city faces annual general fund deficits that would grow to $10.5 million five years from now.
That would be about 12 percent of the city’s total current general fund budget.
The problem, Finance Director Matthew Grady said, is that major revenue categories are growing an average of about 2 percent per year, while wages are rising 4 percent per year and fringe benefits are increasing between 3.5 and 10 percent per year, with health care costs showing the biggest increase.
Wages and benefits total 74 percent of the city’s general fund budget.
If the budget crunch was solved by raising property taxes, they would need to increase nearly 22 percent next year and between 8.2 and 13.5 percent in each of the four years after that, Grady said.
“We know you don’t want to increse property taxes,” Carroll told aldermen at this evening’s special City Council budget meeting, “but we need to find permanent solutions to the budget deficits we’re likely to face over the next five years.”
Carroll said she’s asked her department heads to prepare proposals for how they’d handle a three percent reduction in their budgets next year, which would save $2.2 million. But she said she’s still reviewing those proposals.
Grady said the city will see one sizable increase in revenue in 2010-11, when money from the expiration of the Downtown II tax increment financing district starts to flow into the general fund. That will add about $2.3 million in revenue for the city, and also boost revenue for the two local school districts — $4.5 million for Distrct 65 and $3.2 million for District 202.
He said the city hopes to be able to pick up nearly $2 million a year by raising the home-rule sales tax and increasing other revenues starting with the 2009-10 fiscal year and estimates that the city’s early retirement incentive program will cut costs by $0.6 million a year.
But those steps, along with the proposed 3 percent spending reduction, still leave the city looking at a deficit of up to $5.7 million five years out.
Carroll said the city also plans to create a process for internal competitive bidding to encourage city employess to find ways to do their jobs more efficiently and meet the efficiencies of private-sector competitors.