City to Look at New Taxes, Reductions to Close Budget Gap

Evanston officials will consider increasing gasoline and utility taxes to offset what city staff projected would be a $3.5 million general fund budget gap in fiscal year the 2011 budget.

Evanston's fiscal year 2010-2011 budget was nearly 50 percent funded through the second quarter. "Revenue is coming in pretty much as we predicted," Joellen Earl, director of administrative services said in presenting the quarterly report at the Monday City Council meeting.

While spending in on target, the staff will be "seriously considering" the revenue options as they prepare the budget, said City Manager Wally Bobkiewicz.

The city expects lower than anticipated revenues to fund wages, health insurance, unemployment and the Illinois Municipal Retirement Fund contribution. The city plans to implement a hiring freeze; curtail spending; and place tighter controls on travel and expenditures to meet budget targets in the second half of the year.

The council will consider recommendations to increase the gasoline tax from between one and three cents. A one-cent increase would generate about $170,000, Earl said. A utility tax increase could bring in about $100,000, projections show.

Late payments from the state and a possible reduction in income tax revenue sharing could also affect the budget, Earl said. The city is talking to banks to secure a line of credit if Gov. Pat Quinn's proposal to reduce revenue sharing is approved, she said. Evanston stands to lose $1.7 million.

Other city funds showed both steady and lower than expected revenues. Some of that is due to the normal cycle of revenue collections, Earl said. To reduce those fluctuations, the city staff made several recommendations.

By increasing a General Fund reserve requirement to between 10 and 12 percent from 8.3 percent could build revenues to fund ongoing projects that are now funded with debt. In addition, the city would avoid having to use surplus revenues from other funds, which depletes those funds and encourages further borrowing.

In a comparison with other area suburbs, Evanston's debt level remained high. Staff also recommended the council adopt what Earl called a "vast expansion" of the current debt management policy.

Ald. Coleen Burrus called the debt policy presentation "outstanding".

"Maybe, other than the pension situation, (debt) may be the number two most important problem that we have that we need to focus on," Burrus said. The city's debt policy is one issue that could "keep us afloat or take us down."

The city council also reviewed its goals that were set in 2009. Though the 12 goals remained intact, the council added one additional item labeled youth engagement, and incorporated crime reduction into its goals for improving safety in the city.

Ald. Melissa Wynne proposed a change to the city's Lakefront Master Plan to reflect the goal of enhancing the lakefront rather than developing the lakefront, but later withdrew her proposal. She praised the goals as benchmarks that the council has to work toward.