Daily file photo by Colin Boyle
City Council committed to increasing the reserve balance of the general fund to 16.66 percent by December 31, 2025 at Monday’s virtual meeting.
The resolution included plans to add at least $1 million annually to the reserve fund between 2022 and 2025. Additional contributions to the fund balance could be made from property sales earnings and other alternative revenue sources.
Evanston’s 2021 budget includes using $500,000 from the fund reserves to help offset the financial challenges of the COVID-19 pandemic, as well as to alleviate the effects of a tax increase on residents. After withdrawing the $500,000, the fund balance is estimated to fall to $13.1 million, which makes up 11.9 percent of expenses in the general fund.
Adopted expenses for 2021 are over $111 million, so the reserve balance would need to reach about $18.5 milion to reach the 16.66 percent goal. This means the city needs about $5.3 million more than the current $13.1 million in the reserve fund.
Erika Storlie, the city manager, said the 16.66 percent will function like a “rainy day fund,” and is a standard amount for municipalities across the country. Although City Council has made efforts to reach this standard in previous years, financial difficulties attributable to COVID-19 have rendered the task more challenging.
“This resolution will reaffirm our commitment to getting to a path of having that reserve balance where it should be,” Storlie said. “If approved, we will continue steadily working towards keeping our finances in order with the appropriate levels of expense reductions and revenue enhancements to meet the needs of the residents of Evanston.”
The 16.66 percent reserve balance can be funded from an assortment of revenue that does not necessarily have to be taxes, Storlie said. Evanston Mayor Steve Hagerty said the resolution is not an affirmative vote that the city will raise taxes, and the city’s reserves could increase from expenditure reductions, instead.
Ald. Ann Rainey (8th) said the 16.66 percent goal should be thought of as Council’s best intention, but she does not have full faith the city will be able to attain its goal. She said the city should not raise taxes in any case or carve out an important part of services to contribute to the 16.66 percent. Rainey proposed making an amendment to not raise taxes to fund the reserve goal.
Although Rainey said she thought it was sufficient to tell citizens the general fund reserves will not be funded by raising taxes, Ald. Cicely Fleming (9th) said Council needs to more clearly explain to residents how the city will spend less money or raise more revenue to add to the reserve balance.
“If we don’t have a plan for getting there, aside from just saying we’re going to do it, people do have a fear that it’s going to come down to either higher property taxes or fees or higher parking tickets or whatever it is,” Fleming said.
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