The small surplus originally projected in South Elgin’s 2020-21 budget is now a $319,000 deficit as a result of the coronavirus pandemic, Village Administrator Steve Super told the village board this week.
Village revenue is projected to be down about $1.5 million, or 8.7%, as a result of the drop in sales and gaming taxes and other income sources, Super said Wednesday at a budget workshop meeting.
However, it does not appear that employee layoffs, furloughs or service cuts will be needed, he said.
“The bad news is that our village will be dealing with the economic impacts of this pandemic over the next two fiscal years” or longer, said Super, who initially estimated the revenue loss this fiscal year would be less than $1 million.
Before the pandemic, the general fund — which pays for operation costs and employee salaries and is the largest part of the annual budget — was projected to be about $17.4 million with a surplus of about $56,000.
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Now it’s expected the village will spend about $16.2 million but will only take in about $15.8 million, Super said.
However, there will be no “devastating” problems like other communities are facing because many of the village’s large grocery and drug stores have remained open and the village has no auto dealers or hotels, he said.
“There are municipalities laying off people right now,” Super said. “There are municipalities that are in really bad shape.
“As much as I’d love to have six car dealers on Randall Road, we kind of dodged a bullet by not having to depend on something that wasn’t operating (because of the governor’s closure of nonessential businesses),” he said.
In order to compensate for the losses they will have, a plan to spend $449,000 on new equipment and vehicle replacements will be postponed, he said. The money in the equipment replacement fund will be moved into the general fund.
“(That) is something I think was easy one to decide upon,” village President Steve Ward said. “We keep our vehicles on pretty good, our mechanics keep them up. Another year (with older vehicles and equipment), we’ll be fine.”
“None of us like to see a deficit, but $300,000 or $400,000 in times like this in a $17 million budget, it’s pretty close to breaking even,” Trustee Greg Lieser said.
Even if South Elgin needs to dip into its cash reserves the fiscal current year, which started May 1, the amount in surplus would still be equal to 44% of its operating expenses, Super said. Village policy says general fund cash reserves must be at least 25% of the village’s operating expenses.
The board was set to sign off on the spending plan last month but held off until better data on income losses was available. The approval deadline under state law is the end of June.
In addition to the delay in equipment purchases, the revised budget plan calls for:
Reduction in training expenses for several departments, including police;
Elimination of the village’s appreciation dinner for village employees;
Reduction in the purchase of road salt because of the supply still on hand;
Elimination of a part-time buildings and grounds custodian position;
Elimination of a part-time administrative assistant position and two seasonal positions in the parks and recreation department as well as a reduction in seasonal hours and in May and summer park programs;
The budget revisions also include some new expenditures, including the purchase of protective gear and safety supplies for the buildings and grounds department. Parks and Recreation Director Kim Wascher said the items are needed to reduce COVID-19 exposure in village facilities and to promote social distancing.