Tax revenue could be down anywhere from $500,000 to $1 million in South Elgin because of the coronavirus pandemic, the village administrator told trustees Monday.
The projection was part of a discussion on the 2020-21 budget, approval of which has been postponed to May or June as department heads adjust their spending plans based on the tax decline from the closure of dine-in restaurant service and all businesses other than those deemed essential by the state.
“We are going to see a reduction in revenue, and the revenue reduction is going to be significant,” Village Administrator Steve Super said.
The village’s general fund, which provides the money for daily operations and employee salaries, is the only budget fund expected to take a hit in the upcoming fiscal year, which starts May 1, Super said.
Prior to the coronavirus outbreak, the proposed general fund budget was balanced and projected to be about $17.4 million, with a small surplus.
With the loss of sales, income and video gaming tax and other funding sources adding up to as much as $1 million, the financial picture is dramatically different than it was in February, Super said.
“We’re very fortunate in that we have a mix of sales taxpayer (businesses) that are still open,” Super said. “We have a few junior box retailers that are closed but our three big grocery stores, Target, Home Depot, Best Buy, CVS, Walgreens, our big gas stations, some of our successful fast food restaurants. They account for quite a bit of our sales tax.
“Even though we are going to take a big hit in sales tax, we’re hopeful it won’t be as severe (as what other towns are facing),” he said. “There are communities right now that run on sales tax from car dealers, from Macy’s, Nordstrom. They are getting zeroes.”
In order to offset the revenue losses, the village has frozen all job hiring and public works employees are doing some parks and buildings and grounds work, Super said. All departments have been directed to keep spending to a minimum and to cancel non-essential expenditures, he said.
Despite the temporary spending cuts and early revenue projections, Super said they do not plan to cut services or employees in the 2020-21 budget. One option to make up the income loss is to cancel plans to transfer about $449,000 from the general fund to the equipment replacement fund, which pays for the replacement of old and outdated equipment.
“Vehicles and equipment age … but we also have two great mechanics. We can stretch things out if we have to,” Super said. “We will basically look at every equipment purchase going for the next few years. If something can be extended, it will be extended.”
The village has about $12 million in its general reserve fund, he said, which is more than half the size of the proposed $17 million budget.
“We’ve been fiscally responsible the last six, seven years now,” Super said.
“If we’re sitting on a reserve of $12 million, I don’t think we should be letting people go,” Trustee Mike Kolodziej said. “People need to take care of their families, they need to feed their families, they need to pay their bills. I’d say to tap into the reserves and use that money. That’s why it’s there.”
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