Waukegan officials are projecting that the city’s general fund will finish the current fiscal year with a deficit of more than $600,000, the latest sign that recent budget oversights related to public works projects are spelling financial consequences for taxpayers.
A Jan. 11 memo from Waukegan Finance Director Tina Smigielski to Mayor Wayne Motley and the members of the city’s finance committee says that from fiscal year 2015 to 2017, general fund revenues have increased by 2.5 percent, while expenses have ballooned by nearly 18 percent over the same period.
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The public works department alone is projected to exceed its $5.5 million budget by $1.5 million, or 27 percent, according to the memo.
“We have a true financial issue,” said 7th Ward Ald. Lisa May at Tuesday night’s City Council meeting. “Don’t be mistaken. There’s going to have to be cuts somewhere, because there’s just not enough money. What do you do in your household? You make cuts when there’s not enough money.”
The news of the general fund’s projected deficit surfaced just as the council voted late last year to keep the city’s property tax levy flat despite requests for budget increases from departments such as the library, whose employees have gone years without being able to count on a raise.
May and 1st Ward Ald. Sam Cunningham blamed the projected budget shortfall on mismanagement associated with paying for Waukegan’s share of two projects — the downtown reconstruction of Sheridan Road and the effort to replace the Mathon Bridge connecting Grand Avenue with Pershing Road — which left millions of dollars unaccounted for on the city balance sheet.
Shortly before the City Council learned of an outstanding $1 million bill associated with the Sheridan Road project, aldermen narrowly voted last summer to approve the $2 million demolition of a vacant industrial building on Sea Horse Drive. Several aldermen said they may not have approved the demolition project had they known about the outstanding bill.
“It’s disappointing,” Cunningham said Wednesday morning. “It could be defined as mismanagement.”
Cunningham and May are both looking to unseat Motley in the city’s upcoming mayoral race.
At a Nov. 21 meeting, Motley took responsibility for the budget flubs and announced a new policy that would more closely monitor grants used to fund such public works projects.
“We track the grants from the inception of the grant to the completion of the grant to make sure what happened on Grand Avenue and on Sheridan Road never happens again,” Motley said in November.
Smigielski said Wednesday morning that while the general fund — which pays for the police, fire, building and public works departments, among other things — faces a deficit, the city has “money in our savings account that will be able to help us make our bills.”
“The good news is we have a finance committee that’s engaged and looking at the financial situation of the city in a proactive manner,” she said.
There were about $11.5 million in Waukegan’s stabilization, or “rainy day,” fund as of the end of December, Smigielski said, which is about two months or 16 percent of general fund expenses, and is in line with the city’s minimum balance requirements. But bond rating agencies sometimes recommend a best practice of up to 30 percent of general fund expenses for a stabilization fund.
Smigielski said dipping into the stabilization fund would not be “our preferred way of operating, but we’re not today concerned about liquidity.”
“But having an operational deficit is obviously something we’re looking at before it’s happening,” Smigielski said.
Twitter @lucashammill