Minutes - 11/13/2009 - Citizen’s Finance Advisory Committee GF 4F 0Ak
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yCFCOUN"T FROM: Citizens Finance Advisory Committee
Village of SUBJECT: Third Committee Interim Report
Oak Brook
1200 Oak Brook Road DATE: November 13, 2009
Oak Brook,IL 60523-2255
Website
www.oak-brook.org
I. Introduction
Administration
630 The Citizens Finance Advisory Committee ("Committee") is providing this report
FAX 630.3630.36 8.5.5 045
to the Village Board ("Board") as an update on the various areas that the
Community Committee has been addressing in its recent work.
Development
630.368.5101
FAX 630.368.5128 II. 2010 Preliminary Budget—Revenues and Expenses
Engineering The Committee has reviewed the 2010 preliminary budget ("Budget") with the
Department Village Manager, Assistant Manager, and Acting Finance Director and notes the
630.368.5130 1
110Wri
FAX 630.368.5128 following:
Fire Department Revenues
630.368.5200
FAX 630.368.5251
General fund sales tax revenues are budgeted at $9.6 Million, or an
Police Department assumed 5% decrease from projected 2009 sales tax revenues of
630.368.8700 $10.1 M. The Committee believes that the budgeted sales tax amount
FAX 630.368.8739 may be overly optimistic based upon the trend of sales tax revenues in
Public works 2009. Through November, 2009, Y-T-D sales taxes have decreased by
Department 9.7%from 2008. Month-to-month changes for 2009 vs. 2008 have
630.368.5270 varied from a 10% increase to a 27% decrease. Retail sales forecasts for
FAX 630.368.5295 the 2009 holiday selling season and 2010 that the Committee has seen
are for continued weakness. The Committee suggests that the Village
Oak Public Brook Board revisit the 5% assumed decrease based upon the final receipts for
September sales which the Village will receive in early December in
600 Oak Brook Road order to be comfortable with the budgeted 2010 General Fund sales tax
Oak Brook,IL 60523-2200 Budget amount.
630.368.7700
FAX 630.368.7704
The 2010 General Fund budget revenues include three new revenue
Oak Brook Sports Core items: $150,000 for a new towing administration fee; $100,000 for a
new business registration fee; and $50,000 for corporate water tower
Bath&Tennis Club advertising. The Committee is also guarded regarding the realization of
700 Oak Brook Road these fees given that they relate to new programs. In order to avoid a
Oak Brook,IL 60523-4600 possible budget shortfall, the Board should consider budgeting these
630.368.6420
FAX 630.368.6439 programs at no revenue. Using this approach, any achieved revenues
would be available to help offset budget shortfalls in other areas.
Golf Club
2606 York Road
Oak Brook,IL 60523-4602
630.368.640 0
FAX 630.368.6419
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Expenses
- The Budget contains no cost of living or merit increases for non-union
employees consistent with the recommendation in the Committee's
September 4th report to the Board.
- The Budget maintains a 17.5% employee contribution rate for non-
union employees' health insurance. We recommend that the Board
revisit this issue upon the completion of upgraded job descriptions and a
salary study in 2010 as recommended in our September 4th report, and
make appropriate adjustments consistent with prevailing market total
compensation(cash compensation and all fringe benefits)practices.
III. Expense Allocations/Apportionment
This is an area on which the Committee has spent some time. In simple terms, our
focus was on the procedures for and amounts that are being charged from the
General Fund to other funds. The General Fund bears the costs (common costs) of
people and functions which support other funds (e.g.,the Water Fund, Sports Core
Fund, etc.). Our belief is that there should be full and appropriate
allocation/apportionment of common costs so that the respective Village operations
and funds appropriately bear the full costs of said operations. It is essential that
there is appropriate cost accounting in order to make informed economic and
resource allocation decisions.
The 2010 Budget contains a new allocation of the costs for police patrolling from
the General Fund to the Hotel and Visitors fund of$300,000 with which the
Committee concurs. Also,the Budget contains an increase in the cost allocation for
common administrative costs from the General Fund to the Infrastructure Fund of
$58,000 with which the Committee also concurs.
The Committee believes that the area of allocation/apportionment should be
reviewed on an ongoing basis in order to ensure that all appropriate
allocations/apportionments are being made consistent with the above noted
philosophy and approach.
IV. Business Registration Program
The Committee has spent a good deal of time reviewing this matter and believes
that it is in the best interests of the Village and that a business registration program
should be implemented with a target start date of July 1, 2010. The Committee
understands that most communities surrounding Oak Brook have business
registration programs in place. We believe that the information derived from such a
program would have multiple uses and multiple benefits, including in the areas of
public safety, and economic and community development.
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V. Implementation of a Village Food and Beverage Tax
The Committee reviewed this issue at some length and found that most neighboring
communities have implemented local food and beverage taxes. We believe that in
view of the Village's declining sales tax revenue trend in recent years, a food and
beverage tax is justified as another source of ongoing revenue and its
implementation should be given serious consideration. The economic downturn
which commenced last year underscores the importance of the Village having
additional revenue sources. We understand that at I%, the Village staff believes
that such a tax might generate nearly $1 million in annual revenue when fully
implemented.
We also believe that any revenue generated by a food and beverage tax in 2010
should be used as the funding source for a budget contingency appropriation which
would be used to absorb budgeted revenue shortfalls or expenditure overruns. As
we have noted above, we have reservations as to the 2010 budget estimates for
General Fund sales taxes and other revenues budgeted for new programs, and so we
believe a general contingency appropriation of this nature is warranted.
Conclusion
The Committee recognizes that the 2010 Budget has been and will be an
undertaking involving many difficult choices for the Village management team and
the Board.
We expect that one or more members of the Committee will be present and
available for questions at your November 17th meeting where the Budget will be
addressed in detail.
Respectfully submitted,
Citizens Finance Advisory Committee
Donald N. Adler, Chairman Norma Lauder Randall Teteak
George Paul Klein Todd Rusteberg