On the same night that New England hunkered down in the face of a monster snowstorm, Park Ridge aldermen prepared for their annual budgetary blizzard.
City Manager Shawn Hamilton unveiled Monday an overall $65.3 million spending plan for 2015-16 that includes new property tax revenue from last month’s 2014 property tax levy hike, but does not propose any new spending for flood control projects.
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“As we sit here today, there have been no final decisions” on how to fund the three flood control projects remaining from the city’s initial round of flood and sewer work, Hamilton told aldermen meeting as the city council’s informal committee of the whole.
The draft budget begins a two-month trek that will culminate on April 20 when aldermen are scheduled to vote on the final plan. They must approve a budget before May 1, when the new fiscal year begins.
A series of biweekly workshops to review the proposed budget in detail begins on Tuesday with the Public Works Department. Information and updates to the draft budget will be posted to the city’s website (parkridge.us) under the “Our Government” tab.
While the overall budget for the new fiscal year projects a deficit of $691,229, Hamilton said it also projects a general fund surplus of $408,383 — the third such surplus in a row, he said.
The general fund pays for basic services such as fire, police and public works. But it also must cover deficits for the special taxing district used to redevelop much of downtown Park Ridge (known as Uptown), so much of the general fund surplus might be eaten by that district’s growing red ink.
The Uptown tax increment financing district’s soaring debt was also the driving factor of the 22 percent jump in the combined city/library property tax levy hike. Of the more than $3.9 million increase from the 2013 levy, $2 million is slated to pay that debt.
Aldermen were warned in March 2014 that Uptown TIF costs would increase by an average of $400,000 in six of the next eight fiscal years because the district cannot support its debt from its own property tax base — a difference that must be paid by general property tax revenue.
In a TIF district, property valuations are frozen in the year the district is created (the “baseline” year). As property values continue rising, so do the property taxes paid. The difference in taxes paid between the baseline and the current year (the increment) can be used to pay for public infrastructure improvements, land acquisition and other allowed costs.
Under most circumstances, TIF districts expire after 23 years or when their debt and other obligations are paid off, whichever comes first. The Uptown TIF district was created in September 2003. TIF-backed debt was issued from 2004 through 2006, and was projected to be paid off by 2027.
The district seemed to be performing as expected, but the crash of 2007-08 intervened, causing reduced assessments throughout Cook County during 2010 and 2011.
The Uptown TIF district’s health worsened last June when city officials learned Park Ridge’s collective property value had plummeted 17.8 percent from 2012 to 2013 despite increased construction activity.
Property value drops within a TIF district have a greater impact on tax revenue because if a property’s “equalized assessed valuation” drops below the baseline year’s value, the district gets no increment from it.
That TIF debt is the reason the proposed budget is “as is” or “status quo,” Hamilton said.
The proposed budget postpones “noncritical capital and investment projects” and accommodates increases in health care costs and salaries because the city will be negotiating new contracts with all five of the labor unions representing some employees, Hamilton said.
But “there are no new programs, no new development, if you will,” he said.
The proposed budget does tap additional money from the Sewer Fund for two Public Works employees to be dedicated to flood control work. The sewer and water funds raised from user fees can only be used for water or sewer projects, respectively.