I’ve had a preliminary look at DeKalb’s FY17 budget.

The proposed operations (General Fund) budget, which begins in January, has $2.8 million in additional spending for personnel alone when compared to the FY16 budget that ended June 30. (I am ignoring the current six-month “FY16.5” budget at this time.) Biggest jumps:

$743,000 more in regular wages
$485,000 more for health insurance
$1,712,600 more for police and fire pensions

Total operations spending from the General Fund (GF) is projected to be up $3.3 million as compared to revenues, which are expected to increase by only $2.5 million.

How are they bridging the gap? I’ve spotted three ways so far: Read the rest of this entry

City Still Losing Water Customers

These are the numbers of City of DeKalb water billing accounts for the past 10 years, as reported in DeKalb’s FY2015 Comprehensive Annual Financial report released last month.

Water
Billing
Accounts
Residential
Customers
Industrial/
Commercial
Customers
Non-Profit
(Gov, Schools,
Churches)
Total
Customers
FY069,38472820610,318
FY079,83874721010,795
FY089,99377423010,997
FY0910,00778723911,033
FY1010,01176122110,993
FY1110,02076722411,011
FY1210,10475622411,084
FY1310,01575322510,993
FY149,96073122210,913
FY159,96371721110,891

City of DeKalb released its Comprehensive Annual Financial Report (CAFR) for fiscal year 2015, which ended June 30.

I’m sure city staff will also release the Popular Annual Financial Report (PAFR) as they did last year. It’s a dumbed-down version of the CAFR that nobody asked them to compile, but they get some sort of warm-fuzzy award for it, so it’s all good.

Let’s update some charts. First, the hiring news:

dyerware.com


The hiring spree is still on.

The General Fund budget for personnel expenses this year is $26.9 million, a rise of 2% over last year and a net increase of $500,000 in this budget category. There are a couple reasons why the increase was “only” 2%. The primary reason is that a chunk representing another 2% was sent over to the Water Fund for Water to pay. They’ve also succeeded in reducing health care costs (something I’d like to compliment them on sometime, if only they’d stop annoying me for a minute with the Bozo no-nos).

But wages and pension costs are both increasing well above inflationary levels. I anticipate they will have to come up with $500,000-$700,000 more for this budget category next year.

In other words, despite the rosy picture staff will paint next month in an effort to persuade the city council to hire a human resources director, the council should no way, no how approve any more hires and, in fact, should let attrition do its work for awhile. Read the rest of this entry

As the city ponders a property tax hike of 37% as well as water rate and fee “adjustments,” you may wonder how DeKalb has got itself mired in financial straits.

It’s actually nothing new. DeKalb’s budget issues are — and have been since at least 2005 — the result of snatching nearly every penny of revenue growth and putting them into more staff and higher salaries, to the detriment of other areas such as street maintenance.

Worse yet, DeKalb has to come up with, at minimum, a half-million new dollars in revenue each budget cycle just to stay abreast of annual personnel cost increases. It’s rendered the financial gurus unable to look ahead more than 12 months at a time because they continually need to chase the next rabbit for the proverbial hat.

Want proof? The stated Number One strategic priority of the City of DeKalb is “Infrastructure,” yet capital improvements are precisely the area that’s been starved in the current budget. That’s pretty messed up.

And a proposed 37% hike in property taxes bespeaks the latest shortage of bunnies for the hat trick. Read the rest of this entry

The data for the following charts come from Comprehensive Annual Financial Reports (CAFRs).

In view of DeKalb staff’s continually stated desire to hire, I’ve begun with a look at the numbers of full-time equivalent employees. The city is using a figure of 220 city employees during its budget process instead of the most recently available CAFR number of 230. I’ve arbitrarily split the difference for the chart.*

dyerware.com


No matter whose number you use for the past year, DeKalb’s been hiring at a brisk pace following the Great Recession crash-and-burn. However, some council and Financial Advisory Committee members would like to start putting the brakes on hiring. Let’s look at why. 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.

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