Oak Brook has made about $870,000 in additional cuts from its general fund budget, effective Friday, due to an expected loss in sales tax revenue because of businesses closing during the coronavirus pandemic.
About $597,000 in cuts were made shortly before the village board approved the budget in December 2019.
“This truly is an extraordinary event,” Village Manager Rick Ginex said. “When all of this started, we basically looked at what was happening with everything shutting down. These are some really tough decisions, but we wanted to be proactive in taking necessary measures.”
Village President Gopal Lalmalani agreed.
“We are dealing with something we’ve never seen before, and it’s important that we continue to provide our residents with essential services while at the same time taking measures to deal with the loss of sales tax revenue,” he said. Lalmalani said a couple of weeks ago that some cuts in expenditures might be needed and asked board members Moin Saiyed and Michael Manzo to help staff decide how to do that.
With many businesses being closed, at least temporarily, Oak Brook faces a challenge that most municipalities in Illinois don’t because it doesn’t levy a property tax and instead relies on a normally strong sales tax base that covers slightly more than half of the general fund expenditures.
Oak Brook has 10.9 months, or about $21.1 million, of its annual general fund budget in reserves, which is more than the six months called for by village ordinance. But Lalmalani said he hopes to avoid using those funds.
“We may have to use some of our reserves at some point, but we need to be careful with that because those funds can disappear very quickly,” he said.
Cost-saving measures being taken include a furlough through April of all part-time staff, which is about 30 people, and making Fridays a non-work day for full-time village staff through April.
Ginex said the reduced work week for full-time staff is expected to save $96,000. Furloughs for part-time employees could save the village $36,000 to $62,000.
“The savings for the furloughs will depend on how much we have to pay out for unemployment, which could be up to $26,000,” Ginex said.
“Our employees don’t like it, but they understand,” Ginex said. “It’s a very difficult time for all of us, but our employees have been coming to work. I’m proud of our employees.”
He said union-represented employees, such as police and fire, have been asked about taking furlough days, which could save about $50,000 during April. No decision on that measure had been made as of Thursday April 2.
Ginex said another measure taken is the halting of any new hiring.
“It’s really all non-essential spending that we’ve put on hold right now,” he said. “We’ve put some major capital projects, which don’t have to be done now, on hold, such as $165,000 for a new Bath & Tennis Club roof and $330,000 for new HVAC and tuckpointing at the Heritage Center.”
A reduction in pension fund payments to the state recommended 90% from the 100% Oak Brook has been making could save an additional $300,000 to $400,000, Ginex said, but no decision has yet been made on taking that measure, which would require a village board vote.