City Manager Julia Carroll says she expects it to take at least three years forÂ Evanston to fully work through what she calls a “structural budget gap” of $2.5 million to $4 million.
At a news conference today she said the cuts she’s proposing for the 2007-08 budget are just the first installment on solving the problem.
The budget calls for a net reduction of 17 full-time-equivalent jobs — or just under 2 percent of the city’s workforce.
It also calls for a property tax increase of 5.5 percent.
Ms. Carroll says the tax hike is driven primarily by increases in required police and fire pension payments and that the city’s total spending will rise just 0.26 percent.
She said wages for city workers will increase 4 percent this year and health insurance costs are up 6.5 percent and that she’s proposing spending cuts to offset those and other increases.
She said the city has been funding the pension funds at the level city actuaries recommended — but that pension fund investments, which are controlled by the state, have fallen substantially short of the 7.5 percent yield the actuaries had projected.
In addition, the state legislature in recent years has voted to let police officers retire on full pension after 30 rather than 35 years of service and to double the pension benefits for firefighters’ widows. Both those moves have increased the pension funding burden for the city.
As a result, the proposed tax levy for the two pension funds is increasing nearly 11.8 percent this year.
She said that over the next two years she plans to continue to examine options for outsourcing some city services and increasing the efficiency of services the city delivers directly.
The process has already started to try to bring more efficiency to the city’s Streets and Sanitation Department. But Ms. Carroll said costs there are still “11 percent over market” and more efficiencies need to be achieved.
“We need to benchmark the services carefully,” she added, “Sometimes outsourcing is not the solution, if you lose quality of service as a result.”
She said the city also needs to increase its spending for capital improvements.
“Our infrastructure need some help,” she added, “The longer you defer maintenance the more money it takes to make up the gap. Maintenance is much cheaper than complete reconstruction of city facilities.”
Manager seeksÂ 5.5% property tax hike – Jan. 2, 2007Â