Crystal Thomas
The State Journal-Register
A mixture of cuts, consolidation and tax increases would pull Springfield through the next fiscal year, which starts in March, if aldermen accept Mayor Jim Langfelder’s budget proposal.
Budget director Bill McCarty handed out budget books last week to aldermen, and the city will have its first budget workshop open to the public Thursday.
Because of a possible $11.4 million deficit, increasing pension payments and decreasing sales and income tax revenue, the administration needed to get “as creative as possible,” McCarty said.
Langfelder proposed more than $3.7 million in cuts and $5.5 million in revenue generated through tax increases. About $1.4 million in reserves would be spent down, if solutions weren’t found by the end of the budget process, he added.
On its face, Langfelder’s proposed almost $124 million corporate fund request is greater than what is in the current budget by about $900,000. However, it includes a $1.4 million unavoidable pension payment increase, Langfelder pointed out. Adding all of the city’s funds together with City Water, Light and Power’s appropriation would put the total proposed budget at a little more than $556 million.
Shared services, shared costs with CWLP
In the mayor’s budget proposal, CWLP would kick in $1.16 million more to the city, which would go toward the departments the utility also utilizes: human resources, the mayor’s office, purchasing office, payroll and the city attorney’s staff. The utility will pay the additional million on top of an $8.5 million payment in lieu of taxes, which is calculated through a formula.
McCarty said the idea for getting CWLP to give more money to the city came when city staff thought to consolidate the CWLP’s accounts payable department with the city’s.
CWLP also would partially pay for the salary of a city police commander, who would supervise the utility’s security team.
The police commander chosen would be shifted from overseeing the police department’s finances. By having CWLP pay for part of the commander’s position, the city can hire a civilian finance officer to look over the police department’s numbers, while taking on other duties. In years past, because of turnover, several commanders have needed finance training.
Ward 7 Ald. Joe McMenamin said he supported renegotiating a “realistic” shared services agreement payment with the city. In 2015, the aldermen waived the CWLP’s payment in lieu of taxes so it wouldn’t default on its electric fund debt. Now, that CWLP is in healthy financial shape, it is time for utility to pay the city back, McMenamin said.
‘Tearing down the silo’
The mayor hopes to consolidate positions within finance, marketing and information technology departments, as well. All seven finance officers would be housed in the office of budget and management, instead of spread out across the departments.
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Facilities management, which takes care of the municipal buildings, will be put under public works and consolidated with parking division, with the hopes of saving $100,000 annually.
Snip, snip, snip
A lot of the city’s expenses are fixed costs. Intergovernmental services provided by Sangamon County like the park maintenance and public health department cost the city millions.
About $99.5 million of the almost $124 million in the corporate fund is used for personnel costs.
Through attrition and moving around of positions, the city’s head count will amount to the equivalent of 1,499 positions this year to a little more than 1,486 positions in the mayor’s proposed budget.
Most likely, the city will have four fire safety inspectors, instead of seven, Langfelder said; the cut would allow the fire safety inspectors to move into other roles. A vacant battalion chief position would be eliminated, as well. Langfelder pointed back to 2011, when Mayor Frank Edwards, a former fire chief, removed three fire safety inspectors, though the decision was eventually reversed.
A six-month police hiring freeze is projected to save the city $280,000. Departments have pledged to cut about $48,500 in “commodities,” which amounts to office supplies and pare back on equipment, telecommunications and travel expenses.
The city would reduce the amount of money going to employee health insurance by about $835,000 because health costs stayed flat this year instead of rising by the usual 10 percent, McCarty said. A new high-deductible plan, an onsite health clinic and different pharmacy benefits manager all helped keep the city costs down.
Eliminating the seven positions at the city’s auto body shop, which McCarty said has long been scheduled to close in November, will save the city $398,000 in the next budget cycle. The city will instead contract out any needed auto body work.
If after all of the budget discussions are completed and no more solutions are put forward, the mayor proposed spending down $1.4 million of the city’s reserves, bringing it to about 10 percent of the city operating expenses. Best practice is that the reserves stay within 12 to 16 percent of a city’s budget, McCarty said.
The $1.4 million from the reserves would match the increase in the city’s pension payment. In years past, the city was able to pay for its pension payments and more using property tax revenue. This year, for the first time, McCarty said fire and police pension payments would exceed property tax revenue by $620,000.
Tax increases
Langfelder has figured $5.5 million of revenue generated by sales and telecommunications tax increases into his budget, with the hopes that aldermen will approve.
“I’m going the path of least resistance where I can get five votes, hopefully,” Langfelder said.
Upping the sales tax by 0.25 percentage points, from 8.5 percent to 8.75 percent, would raise $4.3 million. The increase would keep Springfield’s rate on par with Normal and Bloomington, but less than Peoria, Champaign, Urbana and Decatur.
A 2 percentage point increase in the telecommunications tax, from 4 percent to 6 percent, would raise about $1.2 million. The increase would be dedicated to funding Lincoln Library.
Last year, Langfelder proposed four tax increases, and three were shot down. Langfelder said aldermen have approached him with establishing a dining tax of 2 percent. Collecting the tax on 400 city businesses would result in $5 million, according to the city. It is one of the industries in Springfield in which sales continue to grow.
Before most of the aldermen joined the council, a similar measure was proposed in 2011 and was shot down. Restaurants owners lobbied vehemently against the tax, he said.
Langfelder said he believes in upping the sales tax over a dining tax because it doesn’t target any one industry. With Illinois’ Bicentennial celebration in August, Langfelder said he thinks tourism will contribute to increased sales tax revenue.
For Redpath and McMenamin, signing on to a sales tax increase comes with conditions.
McMenamin said he would support a sales tax increase, only if all city workers received a wage freeze. Aldermen have had a wage freeze for the last seven years, he said.
“Everyone has to contribute to the solution, not just our residents,” McMenamin said. “Our employees have to contribute to the solution.”
Even though most workers live in the city because of residency requirements, McMenamin said city employees have generous pay and pension provisions. Plus, they have the additional benefit of employment through the city that residents don’t receive, he said. With a majority of city employees unionized, McMenamin said the road forward would be difficult. Twenty collective bargaining agreements would have to be renegotiated or the contracts would have to stay expired to maintain the freeze, he said.
“If you don’t get an agreement and the parties can’t agree, then wages stay flat,” McMenamin said. “Either they work at flat wages or they go out on strike and we will see how the public reacts to that.”
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‘Not scare tactics’
As part of the budget-making process, Langfelder asked department heads to conduct a “cut exercise” that would eliminate 5 percent of their budgets. For fire, most of the budget cut would come from staffing, which would mean getting rid of 25 firefighters and pulling two rigs off the street. For police, 25 officers would vanish, body cameras would go offline and two traffic wardens would be fired, among other cuts. Public works would pull back on snow removal and traffic light software would be uninstalled.
All of those cuts would save the city more than $4.7 million.
Does the mayor think aldermen would fire 25 police officers or firefighters?
“No, but this put them on the dime, so to speak,” Langfelder said. “They can’t just sit back and say I’m not for a sales tax or for this tax. If you are not for that, what’s your remedy to plug that budget (hole)?”
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Budget workshops and hearings
All budget workshops and hearings will occur at 5:30 p.m. in the city council chambers on the following days:
* Thursday, Jan. 18. Workshop on the overview, treasurer, city clerk, city council, office of economic planning and development and Lincoln Library.
* Monday, Jan. 22. Workshop on human resources, police and fire departments.
* Wednesday, Jan. 24; Workshop on City Water, Light and Power and public works.
* Monday, Jan. 29; Workshop on the Springfield Convention and Visitors Bureau, the mayor’s office and the office of budget and management.
* Tuesday, Feb. 13; Public hearing during the committee of the whole meeting.
* Tuesday, Feb. 20; Appropriation up for final passage at city council.
The schedule is liable to change.
Joe McMenamin for Ward 7 