Friday, April 05, 2013
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City administrator tackles fiscal 2013-14 budget

Part 2

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[April 05, 2013]  Monday evening, city administrator Sue McLaughlin presented a budget overview to the city council. Council members were given binders with actual facts and figures for the coming budget year. In her 40-minute presentation she talked primarily about how to increase revenues for the city.

McLaughlin talked about how the city can help itself by looking at more revenues coming from service charges and fees. She introduced this through a slide explaining that service charges and fees reduce wasteful consumption. They are more equitable because those who don't use services don't pay for them. She also added a quote from the "Revenue Guide for Local Government," which stated: "When a service is financed with (property) tax revenue, users have no incentive to limit their use and therefore create an apparently greater demand." The next slide continued the quote: "(there's) significant public support for increased use of service charges rather than increased taxes."

Some of the fees and service charges McLaughlin is interested in seeing the city initiate include taking a greater percentage of revenues from traffic tickets.

She explained that currently, using a $120 fine as an example, the county collects $73.27 while the city collects only $46.73. McLaughlin said the city has the potential to receive the full $120 on traffic violations it writes by adopting the Illinois Vehicle Code and claiming 100 percent of the fine.

In an average year, the city earns $88,000 from traffic violations and the county $131,000. While that total comes to $219,000, she said there would also be new expenses incurred such as the possible need to hire a part-time attorney specifically for traffic court, and the need to pay some type of remittance to the county for the services of a judge. In the end, she estimated there is a potential for new net revenue of $120,000 per year by making this one change.

Next, she noted there is no charge for sidewalk and curb cut petitions. The city will do a new sidewalk or a curb cut on request free of charge. In matters where sidewalk repair is a matter of public safety, that would not change. However, McLaughlin said right now there are petitions coming to the city for work that doesn't really need to be done. In these cases, she said the city is generally telling the homeowner who makes the request that he or she can do the work and the city will reimburse them. McLaughlin suggested that everyone pay $10 to file a sidewalk petition, and for those that are not deemed unsafe, the homeowner pay half of the cost for the repair.

The city would create revenue through saving on costs to the tune of about $1,200 per year. McLaughlin said this would also eliminate some of the unnecessary work, as when homeowners are asked to pay a portion of the cost, they may decide the work doesn't need to be done after all.

McLaughlin also touched on fees being charged by the building and zoning office, saying they were insufficient to cover the costs of the work required by that office. She also noted that is a project that building and safety officer John Lebegue is already working on.

The cost of issuing a birth or death certificate far exceeds the fee the city is charging for it. McLaughlin estimated the city is losing approximately $14 every time they issue such a certificate. She recommended making changes to that fee structure.

McLaughlin also told the council that not in all cases could the city charge a fee equal to the true cost of the service and keep the fee reasonable, but the point is to reduce the loss as much as possible.

Parking ticket fees are also not up to snuff. However, McLaughlin noted that in most cases the tickets are not paid on time and additional charges are assessed. The bottom line is that by the time the fine is actually paid, the city is averaging $1.16 per ticket net revenue.

She said the city could make a great deal more, though, by increasing the fines and also by enrolling in the Logan Government Debt Recovery Program for delinquent tickets. In that program, the Illinois state comptroller will confiscate tax refunds, lottery winnings and other state payments and turn the money over to the city. She said this could be used for sewer fees, mowing fees, parking tickets and more. She also said the city could possibly benefit to the tune of $13,580 on parking tickets and over $45,000 on mowing and cleanup fees and fines.

McLaughlin noted the city asks very little if anything of its employees when it comes to helping pay for their own health insurance. She told the council that many municipalities require a 20 percent contribution by the employee. She also noted that the city could offer an incentive for employees to switch their coverage to a spouse's policy when possible. She said the city could offer an annual lump-sum payment between $1,000 and $5,000 if the employee will enroll in a spouse's insurance instead of the city's.

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Other suggestions McLaughlin brought before the council included business licenses, animal registration, increases in nuisance fines such as for weeds, noise and garbage, excavation and demolition fees, and a sign permit with fee. She also suggested permit fees for special events and impound fees for towed vehicles.

Turning to taxation, McLaughlin told the council they have the power to asses a utility tax of up to 5 percent of a total bill. The city could collect the tax on both electricity and gas. She said the revenue generated could be specifically earmarked for a city safety building. She told the council that, for example, they could elect to build a $10 million complex, finance it at 4 percent over 20 years and make the payment through this tax. She estimated the revenues generated annually would be $505,000 per year with a 3 percent tax or $840,000 per year with a 5 percent tax. She noted several towns around the state that do this. Decatur collects 1.25 percent, Effingham 1.5 percent, Bloomington 2.5 percent, Peoria 3.5 percent on gas and 5 percent on electric, and Canton 5 percent, just to name a few.

Moving on, McLaughlin told the council there are many things to consider concerning the city's sewer plant and the revenues it generates. McLaughlin talked to the council about long-term needs of the waste treatment plant. She projected that the city will need to invest about $15 million in treatment plant improvements in order to comply with Environmental Protection Agency standards.

The city is still paying $642,388 a year for the last improvement and has 10 years left on that note.

In addition, items on the 2014 "to do" list include cleaning the clarifier at $70,000, grit removal at $50,000, CSO design (required by EPA) at $150,000, repairs to the Palmer lift station at $60,000, manhole rehab projects totaling $58,000 and one pump replacement at a cost of $30,000.

By law, the sewer department must be self-sufficient. McLaughlin expressed concern that the department will not be able to handle what is coming down the road with the current fee structure. She told the council that charging for sewer service according to water consumption is a fair and reasonable way to increase revenues for that department.

Leaving out the proposed changes to the sewer billing and the utility tax, McLaughlin showed the council that they could cover the $80,000 deficit and actually add another $50,000 to general fund reserves through implementing the changes in fees.

Moving on to budget cuts, she demonstrated the city could once again not only balance the budget but also add $14,000 to reserves. Cuts she suggested included reducing the fire department request for SCBA masks by $1,000. This would not cut out all the department had requested for masks but reduce the number they could purchase by one.

She also suggested cutting the demolition budget by $5,000, reducing police training costs by $5,000, removing $10,000 from the building and grounds budget, removing $8,000 for a replacement door at the city landfill, and removing $10,000 for three decorative replacement street lights.

She also suggested doing away with a proposed retail study at a cost of $25,000. In addition, she put on the cut list removing a proposed increase in the city administrator budget of $30,000, or eliminating the position altogether, which would cut the total budget by $100,000 for the 2014 fiscal year.

At the end of the presentation, Melody Anderson expressed appreciation for McLaughlin's work, saying she most certainly had not missed the Saturday morning budget sessions this year. Marty Neitzel said the information presented had been clearly stated and understandable. She also noted McLaughlin had enlightened the council on things they were not aware they could do to bring in revenue.

David Wilmert commented that he'd like to see some red ink on the budget draft. He said there wasn't anything wrong with trying to cut back on some things. He also noted on the topic of adding fees and taxes, that perhaps one reason people come to Lincoln is that the city doesn't impose all those extra things. He said he thought that was something to think about.

McLaughlin asked the council to make their notes in their binders. After next week's workshop session she wants the council to leave their books at City Hall. She will then replace draft pages with final copies and return the books to them.

Currently the plan is to have approval of the budget on the April 15 voting agenda.


Part 1

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