A preview of next year’s city budget indicates that Evanston has $4 million in new expenses for the 2005-06 fiscal year — and no clear way to pay for it.
Finance officials told aldermen during a six month budget review at Monday’s Evanston City Council meeting that increased employee wages, higher health insurance costs and funding for a proposed elm tree vaccination program would cost the city an additional $3.9 million next year.
That figure doesn’t include rising energy prices, with natural gas and electricity costs projected to increase 20 percent and 5 percent, respectively. And with gasoline prices at an all-time high, a sluggish state economy and static tax revenues, city officials are facing a “tremendous challenge” in balancing next year’s budget, according to Ald. Arthur Newman (1st).
“We have flat revenues. And we already have $3.9 million in expenses,” Newman said at the City Council meeting. “If anyone thinks the city is loaded with money, it’s just not there.”
The city’s five-year financial forecast predicts that revenues will increase by 3 percent, but expenditures will increase by 5 percent. The city has corrected that imbalance in the past, either by raising taxes or through other revenue-generating means — and likely will need to do so again.
“We still have the same structural imbalance that we’ve had,” said Bill Stafford, director of the city’s finance department. “It’s going to be a struggle as it has been. There are some real issues and its going to be a tough budget to balance.”
Finance officials also told aldermen that the city needs $283 million worth of capital improvements — from park renovations and street improvements to upgrading public facilities. But the amount of money the city sets aside for capital improvements depends on the outcome of several legal cases against the city, with potential liabilities in all cases amounting to $25.3 million.
The biggest segment of the city’s forecasted increase is for wages, which is projected to increase $1.7 million. But that figure is determined mostly by labor contracts that already have been signed, Stafford said. He said his primary concern is the cost of employee health insurance — projected to rise by $1.1 million this year.
The city is looking at ways to bring down health insurance costs, including partnering with other communities and organizations to get lower group rates from health insurance providers.
A proposed elm tree vaccination program is projected to cost $1.1 million, and city officials are unsure of how additional money will be found to fund the undertaking.
But Ald. Edmund Moran (6th) said the wage increase is one of his major concerns. Seventy-five to 80 percent of budgetary allotments go to personnel expenses, he said.
“When … you have major potential increased expenditures that are not a function of any new programming or personnel, it’s just that things cost a lot more and they go up fast,” he said. “We’ve cut back on more discretionary programmatic stuff.”
Although Moran said he thought property taxes were too high, he didn’t rule out raising them in the future.
“I have been opposed to property tax increases,” he said, “but we’ve got a lot going on out there and we’re just going to have to see where we’re at.”
The city budget for the 2004-05 fiscal year passed on Feb. 23 included a property tax increase of about 6.85 percent and a gas tax increase that affected not only homeowners, but institutions and businesses such as NU, that don’t pay property taxes.
Reach Mike Cherney at [email protected].
