Archive for the ‘ Payment Due? ’ Category

On the February 9 DeKalb city council meeting agenda was this action item:

2. Resolution 2015-011 Waiving Competitive Bidding and Authorizing the Execution of a Website Design Agreement with CivicPlus in an Amount not to Exceed $56,189 in Year One.

Staff said they didn’t have time to put out Requests for Proposals (RFPs). They claimed they’d been taken totally by surprise by Department of Justice findings that the city’s website was not compliant with Americans with Disabilities Act standards and needed to act this instant to meet a tight deadline in June.*

Did the city council pass the resolution? I honestly don’t know. The discussion took one hour, twenty-six minutes and there were several votes taken, including one that I described in my notes as “original motion, DEAD, 9:07.” I could be wrong. At any rate, council still continued to talk and vote until an expenditure up to but not exceeding something around $51,000 was passed 5-3.

There’s another potential issue besides the possible zombie motion, too. Waiving bidding on a public improvement (as opposed to routine procurement) of $20,000 or more generally requires a 2/3 majority to pass. So do some budget amendments, and the CivicPlus deal definitely did blow the website budget of $20,000. I’m not sure what the exception was that allowed for a simple majority vote in this case.

Lest you think I’ve totally lost it, let me tell you I’m not the only one. Staff have not been able to get the minutes right for this meeting and the culprit is the CivicPlus discussion. Right now we’re awaiting the second revision. Read the rest of this entry

The city council voted Monday on a measure to waive the customary bidding process and award a contract to out-of-towners for a new custom website. Staff insisted only CivicPlus could make DeKalb’s official website comply with Americans with Disabilities Act (ADA) rules within a 4-month deadline negotiated with the U.S. Department of Justice.

Some city employees, including the city manager, have worked with CivicPlus previously and elsewhere.

Some city residents have questions about this deal and Bessie Chronopoulos offered a list of hers in a letter to the editor. Read the rest of this entry

**Update** 1/26. Related: “Sales tax coffers could get boost with new law”. Discusses the Marketplace Fairness Act and its impact (if it ever passes the U.S. House) on state revenues.
**Update** 1 p.m. Related: “Now comes the Internet Sales Consultants”. It provides more food for thought on this scheme, as well as a description of an omission that sounds like a possible violation of the Open Meetings Act.

DeKalb’s city council is considering a new kind of retail revenue source. You should know about it because your tax money is involved.

Chronicle:

City leaders are trying to lure Internet retailers with an 85 percent sales-tax rebate.

The first step in the coaxing process came Monday when aldermen unanimously approved an agreement with a shell company called Great Lakes Economic Development LLC.

The company was created by Tom McPeak, a partner with Atlanta-based Barnwell Consulting, who said he has an undisclosed client interested in setting up shop in DeKalb.

McPeak is an acquaintance of Roger Hopkins. Hopkins used to head the DeKalb County Economic Development Corporation, and after that contracted with the city to provide economic development services for a time. And it looks like he’s done us a solid in facilitating an introduction.

Let’s take a closer look at the potential in this gift. Read the rest of this entry

A few days ago in another post I said this:

Fine/fee revenue can be highly variable, as we’ve seen with the disappearance of building permit revenues. TIF districts have time limits and both of ours expire at the end of the decade. These are appropriate sources for making capital improvements as you can. They are not meant to cover permanent, fixed costs yet that is exactly what is happening.

That post ran long, so I saved elaboration on the above point for another day. But now I’ve picked it back up with a vengeance. Read the rest of this entry

The City of DeKalb released its FY2014 Comprehensive Annual Financial Report last month, and as usual there’s plenty to digest. A large part of this report draws data from supplemental reports found in the back of the CAFR, some of which track the past 10 fiscal years and are therefore useful for understanding the lingering effects of the Great Recession on the local economy.

First up, I’ve prepared a chart of taxable sales. Retail sales taxes make up more than 40% of DeKalb’s operating budget — no other single revenue category comes close — so sales and the taxes they generate are important indicators of economic health.

The advantage of looking at the sales themselves instead of the tax revenues is that you don’t have to account for sales tax hikes, abatement deals and other “noise” in the data.

dyerware.com


Of course there’s a lot of overlap between state and local sales, but showing them both underscores the trend, which is this: Taxable sales have stabilized since 2009, but they’ve more or less stabilized at 2005 levels.

And it’s not just retail sales that have stagnated. DeKalb’s share of the state income tax is climbing, but so far has only made it back to 2008 levels. Utility tax revenue totals for FY2014 were less than FY2012’s.

Water sales were down by 5.2%. If you think about the combo of utilities and water falling, it seems likely that it can’t all be about plugging leaks and conservation. DeKalb’s likely still losing population.

City government, however, is bucking that trend. Read the rest of this entry

Overtime comprised most of DeKalb PD’s excessive spending over budgeted amounts for FY2014, but another major culprit was spending in the “Commodities” category that came to roughly twice as much as the $260,000 budgeted.

Commodities were clearly under-budgeted in 7 of 10 accounts in that category and in a couple cases downright unrealistically. For example, actual costs for gas, oil and antifreeze for that department came in a bit over $117,000 for FY2013, yet PD budgeted only $95,000 for the same item the following year.

What’s going on? My guess is that the decision to return expenses from off-budget accounts back into the department’s budget accounts was an unexpected development.

Fortunately, spending for general government was lower than budgeted and this partially offset the excessive spending on public safety, leaving the city at a mere $347,773 over its General Fund budget for the year.

Resources:

City of DeKalb FY2015 Budget

Comprehensive Annual Financial Report for Fiscal Year 2014

Auditor’s Letter to Management (see p. 6 of the PDF)

City of DeKalb’s Downloads Page (Look under the Finance heading for annual budgets and CAFRs)

Airport Operating Deficits

The Comprehensive Annual Financial Report (CAFR) for FY2014 is out. So far the document is only accessible as part of the December 8 council meeting agenda, but at some point will probably appear on the city’s downloads page under the Finance title.

Let’s stick a toe in by first visiting the DeKalb Taylor Municipal Airport (DTMA) annual operating deficits:

FY2006: $467,332
FY2007: $720,557
FY2008: $645,131
FY2009: $778,324
FY2010: $524,272
FY2011: $681,713
FY2012: $413,576
FY2013: $491,217
FY2014: $491,997

The city has to make up for the deficits using tax money that would otherwise go to general operations.

Thoughts:

DTMA took on fuel sales a couple years ago, and all of its hangar space is rented out (PDF p. 143). I do not know whether the city has recently compared rental rates with other airports, but if not that might be a good next step to ensure that taxpayers aren’t subsidizing operations any more than they have to.

Déjà vu. DeKalb County Board is considering placing a proposed sales tax increase on the ballot next spring, for…an improved jail.

“What I plan to do is on the county board meeting on Dec. 17 is to review where we’re at with the jail expansion and some options for where we might go, one of those options being whether we go for referendum,” [County Administrator Gary] Hanson said.

Never mind that they’ve told us ad nauseam about how the tipping fees from the landfill expansion will pay for the jail expansion.

What changed?

[The landfill tipping] fees are estimated to total about $2.2 million a year, with about $1.9 million being available for the jail expansion project.

But that also is what the county would lose if Sycamore’s sales tax agreements with two airline fuel-purchasing companies collapses under a legal challenge from the Regional Transportation Authority, which is arguing that the companies don’t actually buy the fuel in Sycamore.

Boo-effin’ hoo.

When the airlines set up shop in Sycamore about 10 years ago, it doubled the county’s annual sales tax take from $2 million to $4 million.

Did you hear all the discussion back then about how to use the extra $2 million? Me neither. The jail expansion project was apparently not important enough to get a piece of the windfall.

And windfall it most certainly is: So much money was coming from just two companies, and they made it clear during the referendum discussion of 2006 that they would leave for cheaper pastures if the county tried to apply any sales tax increases to them. They have no loyalty to DeKalb County.

Nevertheless, instead of setting aside a stream that — clearly — could disappear at a moment’s notice, the county quietly absorbed the extra revenue into operations faster than a Bounty® brand towel.

Do we really want to reward this kind of shortsightedness?

DeKalb city staff have come up with a proposal to raise the city’s property tax levy by 10%. Daily Chronicle reports that the council gave initial approval on Monday.

Here’s how the city is presenting the recommendation:

City staff want to move away from the current practice of using the general fund to pay for pension obligations property tax revenues don’t cover. Finance Director Cathy Haley explained property taxes currently fully fund police and fire pension obligations and 97 percent of Social Security and Medicare costs. But only 26 percent of the city’s costs for the Illinois Municipal Retirement Fund comes from property taxes, leaving the general fund to cover more than $720,000.

A 10 percent increase would bring in an additional $495,000, fully fund Social Security and phase in fully funding IMRF obligations through property taxes, Haley said.

Council will furthermore consider the recommended hike in a joint meeting with the Financial Advisory Committee tonight.

The most important thing to understand is that the discussion is not just about setting the levy for the upcoming tax year, but about committing to a significant policy change in how the city chooses to fund its pensions — possibly for years to come. Read the rest of this entry

The numbers are the amounts budgeted for streets combining two line items, Street Maintenance/Repairs (8632) and Street Construction/Reconstruction (8633). It does not include alleys or permanent street improvements (e.g., Taylor Street widening).

Keep in mind, what’s budgeted may not always reflect what’s spent, either.

Fiscal YearCapital
Projects
Motor FuelTIF 1TIF 2Totals
FY200775,000980,000417,60020,0001,492,600
FY2008115,0001,650,0003,390,00020,0005,175,000
FY200901,500,000350,000100,0001,950,000
FY201001,500,000450,000100,0002,050,000
FY2011360,0001,050,000450,000100,0001,960,000
FY2012378,0001,120,000950,000100,0002,548,000
FY2013300,0001,382,000530,00075,0002,287,000
FY2014150,000635,000500,000500,0001,785,000
FY2015300,000400,000500,000500,0001,700,000
Totals1,678,00010,217,0007,537,6001,515,00020,947,600

Observations:

  • The Motor Fuel Tax Fund is taking a dive.

  • Overall funding of street repairs and reconstruction has dropped significantly.

  • TIF 2 has only just recently become a major funder of street reconstruction.

  • Now I’ll explain what has happened in three parts.

    Part 1: The Motor Fuel Tax Fund used to hold both the state and local (home rule) motor fuel taxes, but the city was having trouble keeping up with other infrastructure needs and began placing the local portion into the Capital Projects Fund, where it has to compete with other projects besides road-related ones. (DeKalb has also dedicated some local motor fuel tax funds to the Public Safety Building Fund.)

    Part 2: The city doesn’t dare budget more for streets from the Motor Fuel Tax Fund because it doesn’t know how much is in it. Here’s the explanation from the FY2015 budget narrative:

    This fund has some outstanding obligations due to outstanding bills from past construction projects in the amount of approximately $1.0 million dollars. The City will also receive $198,673.00 from the Illinois Jobs Now Capital Bill. The balance in this fund is attributed to the outstanding obligations of projects that have not been closed out. These outstanding obligations amount to an estimated $1,888,455.73. Once the Illinois Department of Transportation completes the audit of this fund a greater understanding of the actual amount available will be determined.

    Part 3: TIF 2 can be used to catch up/make up for/cover up for the lack of funding to streets now that the fund has accumulated a $7 million nest egg for remodeling the city hall building.

    Related posts:

    So DeKalb Has a Streets Problem — Is TIF or a Sales Tax Hike the Answer?

    FAC Using the Faulty Street Repair Numbers Too