Fiscal 2018 Budget 'A Foundation For the Future'
A proposed $45.9 million city budget provides “a foundation for the future,” according to newly elected Urbana Mayor Diane Marlin.
But getting to that better future will require sacrifices over the next few years, the mayor warned at a news conference Monday, where the city’s proposed fiscal 2018 budget was released.
Declining sales, income and hotel-motel tax revenues -- combined with no resolution to the ongoing Carle Hospital property tax court case -- will leave the city general corporate fund balance $1.2 million below the recommended $4.9 million or 15 percent of recurring general fund expenditures by this June 30.
Marlin is proposing a number of budget cuts and one major revenue increase to begin to close that gap.
“The fiscal challenges we face are daunting and will require sacrifices, but I am committed to addressing them head-on,” Marlin said. “The city of Urbana is taking the difficult but necessary steps to build a foundation for the future through financial transparency, accountability, and practical steps to improve the city's financial position going forward."
Marlin said she was moving away from using "short-term strategies" to balance the budget, such as reducing pension funding for police and firefighters, deferring payments to METCAD and taking money from the Vehicle Equipment and Replacement Fund.
"We will not continue this practice because we're digging ourselves into a hole," she said. "We must have a balanced and fiscally sustainable budget."
The new budget will take effect July 1. The city council will consider the budget in coming weeks, with a final vote scheduled for June 19.
Among the steps Marlin and city Finance Director Elizabeth Hannan are recommending:
- A proposed 0.5 percent increase in the city’s food & beverage tax, to a total of 1.5 percent, to generate $390,000 annually. The tax would be on prepared food and beverages for immediate consumption.
- The city plans to offer later this summer a Voluntary Separation Incentive Program plan offering financial incentives to non-union employees willing to separate from city employment. Job eliminations or reorganizations would only be approved if they result in substantial savings. About 100 employees would be eligible to apply initially.
- No salary increase for department and division heads, and other professional managers. A very modest pay increase is suggested in the budget for union employees and some non-union employees.
- A number of other budget cuts, including dropping plans to purchase a $100,000 bucket/auger truck; saving $140,000 through a reorganization of the Community Development Services Department with the upcoming retirement of the current director; reducing outside legal services by $59,000; reducing the mayor’s travel budget by $5,000; private offices would be cleaned on a reduced schedule, saving $5,000; yard waste, leaf and Christmas tree collection programs would be reduced in frequency, saving $20,000.
- Putting into a separate general reserve fund $5.26 million in property taxes paid by Carle and Presence Covenant Medical Center that are the subject of litigation and previously had been included in the city’s general corporate fund reserves.
The budget does include several investments in Urbana’s future, including allocating $190,000 in salary and benefits to hire a new city administrator to bring professional administration to the city and bolster economic development efforts. The new position, which Marlin noted is called for in the city code, will be financed through elimination of the $110,000 chief of staff position and through a reduction in the mayor’s line item for hiring outside legal counsel. Marlin predicted it will take about six months to get a new administrator in place.
The budget also calls for spending $75,000 for the first phase of the city facilities plan, which will help define a long-term strategy for addressing city facility needs when funds become available.
While not addressed in the current budget, Marlin said city reductions in police and fire pension contributions in recent years have gone too far and could wind up costing the city considerably in the long run. Marlin said she and Hannan will review the issue with pension fund representatives in coming months and recommend a strategy to address the funding gap.
The budget also addresses some much-needed street resurfacing projects, including:
- Lincoln Avenue from Green Street to University Avenue ($1.05 million cost).
- Vine Street between Main Street and University Avenue ($400,000).
- Race Street from Washington Street to California Avenue ($560,000).
- Springfield Avenue from Gregory Street to Coler Avenue ($390,000).
- Continuing reconstruction work on the $2.9 million MCORE project on Green Street between Lincoln Avenue and Wright Street.
- Reconstruction of Airport Road from Willow Road to Cunningham Avenue ($1.8 million).
- Construction of a shared-use path on the east side of Cunningham between Kenyon Road and Napleton Way (city cost $185,000).
Overall, the budget projects $46 million in spending and $44.9 million in income, with one-time capital expenditures accounting for the imbalance. In the general corporate fund, which funds most city operations, spending is projected at $33 million and income at $33.4 million.
The city’s property tax rate would remain capped at $1.355 per $100 of assessed valuation, the same as in recent years.