Deficit blamed on property taxes

By Joe Healy

All around the board, expenditures seem to outweigh revenues, and as a result, DeKalb is expected to see a deficit for fiscal year 2004.

While the next official statement from director of administrative services Linda Wiggins isn’t expected until an upcoming March workshop, the forecast for DeKalb looks grim both in 2003 final projections and the figures projected for 2004.

Fiscal 2004 projected revenues of $21,002,857 compared to projected expenditures of $21,711,982 come out to an overall difference, or deficit, of $709,125. With the question being posed “what do we do now?” the city in the upcoming months will look at the various problems causing this deficit and how to solve them.

A significant problem lending a hand in DeKalb’s shortfall is the revenue generated from property taxes. Although this revenue is projected to see a 19 percent increase in 2004, because a modest portion of property in DeKalb lies within NIU, a strain always will be placed on the city within this tax category because NIU is tax exempt.

Wiggins said other college towns in Illinois witness below-average revenues from property taxes. Because most college towns aren’t heavily populated outside of the campus, a city such as DeKalb is forced to consider other options for aiding the school district, which is a primary recipient of property taxes.

Sales taxes, 37 percent of all DeKalb revenues, are projected to fall nearly 4 percent from 2003 to 2004. Because sales taxes are referred to as elastic revenue, their dependability and stability tend to fluctuate given certain trends.

“This city lives and dies on sales tax,” Wiggins said. “They ebb and flow as the economy and weather go.”

Wiggins said prolonged bouts of extremely cold or hot weather can determine one way or another how well revenues are compiled from sales tax. For example, energy and gas bills tend to be a great source of revenue for the city during bitterly cold bouts, like the few lately seen here in DeKalb, because people naturally will keep the heater on in their homes for extended periods of time.

Also, sales taxes are expected to decrease because the city will make a transfer of sales tax generated within the TIFF district to put into the TIFF fund, which will be used for possible projects within the TIFF district.

Intergovernmental revenues are projected to fall nearly 10 percent in the next fiscal year, largely due the state’s poor economy. Otherwise known as state income taxes, these revenues would continue to decline unless the state as a whole financially experiences brighter days ahead.

From 2003 to 2004 fiscal years, expenditures are expected to rise 10 percent in terms of money delegated to city personnel consisting of 221 full-time employees with 36 in management positions with the balance unionized.

Wiggins said two aspects are greatly affecting the amount of expenditures. Health insurance costs from the general fund are up 29 percent while pension costs are up 16.3 percent.

This concern is what sparked an individual concern at the last city council meeting over the benefits the police department would receive under an agreement with Fraternal Order of Police Lodge 115. Various aldermen had some qualms over this agreement, which was eventually approved, because pay increases for the police department over the next three years could burden the city further.

An option not viable for the city to rely on to make up for their deficit is pending new retailers such as Kohl’s, Best Buy and the Northland Plaza and Oakland Place build outs. Wiggins said even if these places were to open tomorrow and flourish, it still wouldn’t be enough to make up for the already lost ground.

Wiggins said with this deficit, three options remain. One, that DeKalb further reduce expenditures from the non-personnel side. This would be money DeKalb gives to outside agents. Safe Passage or the local United Way could see devastating effects and is something Wiggins said is an option she particularly doesn’t favor.

Option two would be to raise taxes. In this case, raising taxes would include a couple of increases that would cover the shortfall.

Option three is to pass a deficit budget and hope revenues rebound in the state economy. If this weren’t to occur, Wiggins said, then DeKalb might find itself in a big hole.