Wednesday, April 28, 2010
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City briefs: City will begin new year with no working budget; and more

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[April 28, 2010]  In a historic move, Tuesday night the Lincoln City Council decided not to pass a working budget resolution before the beginning of the new fiscal year.

At the moment the city does have a balanced document, but it hasn't come from changing the employee health insurance plans, as they had hoped.

Mayor Keith Snyder said that when the figures were all put together after Thursday night's meeting, considering all the cuts plus the implementation of a hotel-motel tax levy, the gap between revenue and expenditures was still about $68,000.

Currently the only way the city can find to fill that gap is through a reduction in wages.

Snyder said that the firefighters had agreed to take 64 furlough hours per employee across the 12-month period from May 1 this year to April 30, 2011. This move will save the city $19,380.

In the police department, he noted that there is going to be a vacancy that will not be filled in the coming year. This will save another $29,000.


A reduction of part-time hours for the mayor and building and safety office and a cut in wages to the street department and clerk's office will make up the balance.

Snyder said that in the street department and clerk's office, the city will contact the Illinois Municipal Retirement Fund administrators to look at offering some early retirements.

Alderwoman Melody Anderson, who chairs the finance committee, said that the early retirements may not be as effective as the city would like. Once offered, employees have up to a year to make the decision to take the retirement.

If it is offered now but employees delay their decision, it will not help the budget as much as if they would take it immediately, and that is a decision the city cannot control.

The original plan had been to re-adjourn the April 19 voting session meeting and pass a budget resolution.

However, Plotner and Anderson had discussed during the week whether or not this had to be done before the beginning of the new fiscal year.

Because many of the decisions that brought the council to a balanced budget had come in the 11th hour, the opinion was that if the budget didn't have to be passed, buying a few more days to shore up the figures would be of benefit.

Tuesday night, Plotner suggested that the council put off the vote, based on the fact that the city is not required by state law to pass a budget before the end of the year.

It comes down to state law that if the city has an official budget officer, they must pass a budget and submit it to the state of Illinois as their official record.

However, Lincoln does not have a budget officer, and they do not file their budget document with any other government agency.

Instead, the city files an appropriations ordinance annually, and that document is what goes on record.

In the last 15 minutes of the meeting, city attorney Bill Bates arrived and was asked to quickly verify Plotner's opinion.


When the voting session from last week re-adjourned, Snyder said that Bates had in a short period of time studied all he could find and concluded that Plotner was correct. The vote did not have to take place before the end of the fiscal year.

In the voting session, Alderman David Wilmert made the motion to table the passing of the budget resolution. That vote passed 9-0 with all the aldermen present.

Bates advised the mayor that in order for the city to continue operating into May, a motion needed to be made that permitted department heads to conduct their business according to the 2009-10 appropriations ordinance. When that motion came to a vote, it passed 8-1, with Alderman Buzz Busby voting no.

The city does not intend to drag this process out any longer than absolutely necessary. It is their intention to bring the budget resolution to vote on Monday.

Hotel-motel tax

The mayor handed out a document showing the hotel-motel tax levies of surrounding cities and pointed out that Lincoln is about 1 percent below the surrounding towns and cities, such as Bloomington, Decatur, East Peoria, Morton, Normal and Peoria.

He told the council that passing a 1 percent levy would increase city funds by $24,000 a year. However, there are rules as to how this money can be used, and it comes down to promoting tourism and the city.

Snyder said that with this money the city could support their contributions to the annual Lincoln Art & Balloon Festival, the Railsplitter Festival and Main Street Lincoln, with approximately $9,000 left over.

He suggested that the $9,000 still locked into tourism and city promotion could be invested in city marketing programs as well as perhaps marketing and promotion grants.

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Capital projects designated to general obligation bond

Plotner said that he has come up with a total of $170,925 in capital expenditures that he is hoping to charge to the general obligation bond in the coming year.

However, he has not yet received final approval on his list from the underwriters of the bond.

He warned that if any of the items on his list are not approved, they will have to "go out the window."

He also said that with the exception of fixed payments, such as the City Hall roof loan, expenditures tagged to the bond would have to wait until that money was received, probably sometime in January 2011.

He also noted that charging these expenditures is a one-time deal. If revenues don't improve by the 2011-12 budget year, capital expenses cannot be charged to the bond and will have to be eliminated from that year's budget altogether.

Why are we in this crunch?

It takes approximately $15,000,000 a year to keep the city of Lincoln up and running. Of that sum, about $8,000,000 is in designated funds that can be used only for certain purposes.

An example of the designated funds is the motor fuel tax. These funds are designated that they can be used only for infrastructure expenditures. Specifically, certain roads within the city can be repaired and maintained using these funds.

The other portion of the budget, known as the general fund, amounts to approximately $7,000,000 a year of the city's working budget.

Most of these funds are used to pay wages and fringe benefits for all the city employees. These funds also support city buildings, vehicles and specific offices such as the mayor's and city clerk's offices, zoning and safety, and general operating expenses such as supplies and telephones, just to name a few.

The crunch the city is suffering is in the general fund, and it has come about not because anyone has busted the budget, so to speak, but because the state of Illinois is seriously dragging its feet on making payments to the city.

Plotner had cited at an earlier budget meeting that the payments trickling in from the state are running about five to six months behind schedule.

Because of this, the city will be collecting money from the state in the new fiscal year, beginning May 1, that should have been received months ago.

Alderwoman Marty Neitzel said that this was something she really wanted the citizens of Lincoln to know and understand.

"We have not made bad decisions or bad purchases," Neitzel said. "We made our spending decisions based on what we should have had."

Anderson agreed, saying that the cash-flow issues the city is suffering at the end of the fiscal year are because the state is failing to make its payments.

Money that the state pays to Lincoln comes from sales tax and income tax generated in the city.

Gov. Pat Quinn, as part of his plan to balance the state budget, has proposed cutting the share of income tax going back to municipalities. If his plan passes, revenues to Lincoln will be reduced by approximately $355,000 in the coming year. Couple that with slow payments and it should be easy to see that what is happening to the city financially is not the fault of any city official or any city department.


No flack against the unions, please

Anderson said that the entire budget process has been very time-consuming this year. Not only has the council had to dig in their heels, but so have the department heads.

She commended Tracy Jackson, street and alley superintendent, and city engineer Mark Mathon for the work they have done and the resulting move of $107,000 from the general fund to the motor fuel tax.

She also commented on the unions, saying, "We really weren't able to give them a lot of time to think about (the proposals), so I don't want a lot of flack coming back on our unions."


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