Oak Brook has frozen employee salary increases for 2021 in a cost-cutting move deemed necessary by the majority of the Village Board in the wake of the coronavirus pandemic.
The freeze is expected to result in savings of about $388,000, said Finance Director Jason Paprocki. The only salary increases not impacted by the freeze are previously bargained step increases for police and fire department personnel covered by collective bargaining agreements. However, contracted annual salary percentage increases won’t be given out.
“What we need to do is trim our expenses,” Village President Gopal Lalmalani said. “We have to look long and hard to find areas to cut the fat. We can see the financial difficulties, and it’s going to get worse.”
A strong sales tax base usually accounts for slightly more than half of the village’s General Fund revenue each year, which has allowed Oak Brook to be among a small percentage of Illinois municipalities that doesn’t levy a property tax.
However, sales tax revenues have been hit hard this year because of the pandemic. Paprocki said sales tax revenue in 2020 is projected to be down approximately $1.2 million compared to 2019.
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“We’re pleased to preserve jobs, we’re just not giving pay increases,” Village Board member Ed Tiesenga said, referring to no planned job cuts. “Before we watch the bottom fall out, this is a way to divide a limited pie.”
Police Chief James Kruger said he expects some push back in his department, especially from officers covered by a collective bargaining agreement. Twenty-nine of 55 police department employees are covered by a collective bargaining contract.
“It certainly will cause some challenges,” Kruger said. “I don’t see the collective bargaining group going away quietly with this.”
Village Board member Michael Manzo said he agrees with Kruger’s statement and added that he wouldn’t be surprised if either the police and/or fire union brings legal action against the village.
“We had some village employees take furlough days in the spring, but some didn’t, and I think this is a more fair way to cut expenditures because it’s equal for everyone,” Manzo said. “And a pay freeze is a much better option than mass layoffs.”
He also said the salary freeze could be removed if the village’s financial situation improves significantly during 2021.
Kathy Vonachen, Oak Brook’s human resources director, said the freeze on salary increases definitely will have a negative impact on the morale of all village employees.
Village Board member John Baar was one of two, along with Philip Cuevas, who voted against the salary freeze.
“To give them a 0% raise, instead of 2%, I think is wrong,” Baar said. “I think they deserve better treatment.”
Board member Asif Yusuf supported the freeze, saying that no one knows how long village finances will be impacted by the pandemic.
“We have to be cautious,” he said. “We have to balance expenditures with quality of service.”
The Village Board approved the salary freeze right before approving the village’s 2021 budget.
The General Fund, which is used to cover regular operations, such as police, fire and public works, has 2021 expected revenues of $24.4 million and projected expenditures of $23.5 million.
Paprocki said Village Manager Rick Ginex worked on designating cuts after being asked to do so by Lalmalani.
A total of $953,250 from the Village General Fund was removed from the final budget, with the salary increase freeze, eliminating contracted paramedic services and reducing a transfer to the Sports Core.
Sales tax revenue to the General Fund is estimated at $11.9 million for 2021, which is 5.1%, or $641,000 less than the 2020 budget amount, but about 5.0%, or $561,000, more than the projected amount collected for 2020, Paprocki said.
A projected overall deficit of about $10.4 million in the total 2021 Oak Brook budget of about $63 million will be covered by existing fund balances outside the village’s General Fund, Paprocki said.
A large majority of the deficit is due to budgeted expenditures in the village’s infrastructure, hotel/motel and water works system funds. However, all of those funds have balances that have accrued in past years that will cover the deficits that show for 2021, Paprocki said.