By Finance Director Chris Minick, firstname.lastname@example.org
After holding a public hearing on the budget, the St Charles City Council at its April 3, 2017 meeting passed the City’s budget for the fiscal year beginning May 1, 2017. State statutes require the City to adopt a budget prior to the beginning of the City’s fiscal year, which is May 1.
As Finance Director, maintaining the fiscal health of the City is my highest priority and it is my mission to present a balanced budget each year.
So, the budget for the year beginning May, 2017 is a balanced budget, and perhaps more importantly, the City has been able to balance the budget without any tax increases and without any new taxes proposed. Additionally, the budget as passed reflects the eighth straight year of a property tax levy freeze for the City portion of the property tax levy. There are minor adjustments proposed to the City’s utility service charges and the City is maintaining staffing levels at a level of approximately 270 full-time equivalent (FTE) employees, reflecting an increase of approximately one FTE position. In addition, the budget contains funding for a number of crucial infrastructure projects.
The philosophy of the City’s budgeting process has been to match expenditure streams to revenues so that the City follows a prudent and sustainable fiscal path going forward. The City Council has directed staff to maintain a balanced budget without increasing taxes. The City has been successful in these efforts.
Utility Rates and the Budget
In the mid-2000s, imbalances existed in the City’s utility rate structure and the revenues could not keep pace with costs to run the utilities. These imbalances were exacerbated by the Great Recession and the City undertook a rate study for the utilities to address the structural deficits. The City entered into a long term plan in 2011 to address the structural deficits present in the rate structure.
Those efforts have paid off with the City’s Electric and Water utilities returning to sustainable operations based on the current cost structure. The City’s Wastewater utility will require continued rate adjustments and focus on its operations, mainly due to new environmental regulations which will require significant capital expenses. Last year, the State mandated wastewater treatment facilities remove phosphorus discharge from their wastewater. This directive from the Environmental Protection Agency (EPA) requires the City to undertake a $7.5 million project to improve its wastewater treatment plant. The project is expected to be completed in 2018. Staff anticipates that the average resident will see an annual increase of approximately 3.25% for the combined utility rate adjustments.
City’s Budget is Balanced but the Uncertainty of the State Budget Looms
While currently balanced and in a positive position, the City’s operating results could be threatened by the State’s fiscal crisis and lack of a State budget. The state shares a portion of the revenues that it receives with municipalities. The most often talked about area for the state to reduce local funding is the Income Tax revenues shared. These receipts are frequently referred to as the Local Governmental Distributive Fund, or LGDF. Approximately 8.5% of the funding for the City’s General Fund comes from the LGDF.
The City has a history of preparing balanced budgets and solid financial performance. The new budget continues this tradition and positions the City well to maintain its fiscal health and conservative financial practices going forward.
The City budget, and other financial information, is always available to view on our website.