Normal city financial planners said in a report to city council that budget trends are largely positive or stable with only a few areas of concern. Mayor Chris Koos acknowledged that one of them is mandatory pension contributions for firefighters and police.
âYou know, we might have to go into the general fund this year to make our retirement obligation for the coming year,â Koos told WGLT on Wednesday.
Koos said the city has yet to make the decision. Historically, property taxes have funded pension contributions, not sales tax money from the general fund. Property values ââin the city are expected to increase 0.6%, but the pension contributions required for firefighters and police will increase by 7% and 11.8% respectively, in the most recent year included in the report.
Another area that needs attention is that of utility tax revenues, which have fallen in eight of the past ten years.
âHistorically, one of our biggest producers was landlines and people don’t use them anymore. People’s homes are more efficient, so they use less natural gas or electricity. Our water consumption is declining. And we expect this trend to continue, âsaid Koos.
The advent of streaming video has also eroded the subscriber base for cable television, another source of utility revenue. Koos said the city will need to find a replacement for these declining revenues.
Koos said another area of ââconcern was medical costs. He said increases in health and dental costs are likely to come together as the current increase is due to treatments and procedures delayed during the pandemic that city workers are now planning with medics.
He said more problematic is the skyrocketing prescription drug costs. Koos said there were discussions at the federal level over action to force drug companies to negotiate tariffs with Medicare like it does with the Veterans Administration. He said it could curb cost increases for city retirees.
Koos said that even with the pandemic, the city’s finances looked pretty good in most categories. He said the city had a budget surplus this year that it did not expect as federal aid and various categories exceeded projections related to the pandemic.
Sales tax revenue, for example, rose 5.8% to $ 16.68 million, above pre-pandemic levels, according to the report. Part of that is the rebound from the pandemic, but staff said another piece is the “Level the Game” legislation passed in January that changed the sales tax rules for items purchased online. . There is, however, a two-year drop in tax revenue on sales and beverages – down $ 500,000 during this pandemic period.
The county’s workforce is a concern, Koos acknowledged. The retirement of baby boomers and community-wide corporate hiring patterns have resulted in a five-year decline in the workforce, exacerbated over the past two years by the pandemic.
Staff said the trend indicated a lack of growth, although they expressed hope that recent economic development associated with Rivian will improve the county’s workforce.
Workforce per year:
- 2011 95 760
- 2012 94 936
- 2013 92,706
- 2014 91 152
- 2015 91,406
- 2016 90,907
- 2017 89,431
- 2018 89 230
- 2019 88,256
- 2020 85 103
Unemployment rates, building permits and average house prices are all seen as positive indicators for the city. The same goes for the value of the property; even these are expected to rise 0.6% in 2021. And that’s well below the 2% increase that planners are hoping to balance natural price increases. The debt overlap as a percentage of assessed value has decreased, as has the long-term debt balance. Water and sewage funds are in a strong position, according to the report.