The threat of $22 million in potential legal liabilities is constantly on the mind of Evanston City Council’s members, but some aldermen said it is too early to predict the effects these lawsuits will have on the city’s 2004-05 budget — which means the budget process might not be over yet.
City Council approved the $164 million budget 8-1 last week, enacting close to a 6.85 percent increase in the city’s portion of the property tax and additional increases in natural-gas taxes for those who do not use Nicor Inc. — the city’s official provider. But legal uncertainties left parts of the budget unresolved, and aldermen are planning to review the budget in six months.
To account for the tough future the city faces, the city staff has already started planning possible actions in case things turn sour. Ald. Arthur Newman (1st) said at the Feb. 23 meeting, where the budget was passed, that a worst-case scenario would include a hike of more than 12 percent in the city’s portion of property taxes.
Newman, however, said Tuesday that the council has been planning a long-term approach to these lawsuits so the financial bruising would not hit the city all at once.
“Everything would have to fall together in a very negative way for us not to be able to deal with the lawsuits,” Newman said. “Some of the lawsuits we can push into next year.”
Throughout the winter’s budget review process, aldermen said the greatest unknown for the upcoming budget year could be the city’s eight impending high-profile lawsuits. The situation is of such high concern that City Manager Roger Crum recommended to the council that it take a second look at the budget in September, when more of the cases might be decided.
“It’s not a formal thing we’ve done every year,” Crum said. “This year I suggested it because of the big uncertainties in the economy and the legal liabilities. … We’ll face the issues as we see them coming.”
One of the largest cases on deck for the city, Prado DeVaul v. City of Evanston, is an $11-million police-pursuit case that is currently being appealed by the city. The plaintiff, who won the original case, said the pursuit led to a car accident.
Ald. Steven Bernstein (4th) said it would be premature to put a contingency plan in place right now if the city loses the case.
“I’d like to win some lawsuits and I’d like to win an appeal of our 11-million-dollar judgment,” he said. “These are things that are beyond our control, and that’s a big worry. I’m not even going to think about it; right now it’s something we’re appealing.”
The city currently plans to take out $12 million in new bonds, $9 million of which could be put toward the lawsuits.
Both Crum and the city’s director of finance, William Stafford, could not say if the city might take out further bonds in anticipation of court losses, but Ald. Gene Feldman (9th) said bonds would be the likely choice for financing any money the city might owe.
“There are strategies in place to deal with it, and some of them are unpleasant,” he said. “There’s no pleasant way to deal with a court decision with costs to the city of that magnitude.”
Ald. Edmund Moran (6th), the lone alderman to vote against the budget, said a worst-case scenario would present a difficult budgetary situation for the city.
“It would be virtually an impossible task to be halfway through the budget year and spend $13 million,” Moran said. “We could turn the lights off and go home, and that might not even make it work.”
