Village of Morton Grove, Illinois Adopted Budget For the Fiscal Year 2007 January 1, 2007 TO: Village President and Board of Trustees Citizens of Morton Grove FROM: Joseph F. Wade, Village Administrator I am pleased to present to you the Fiscal Year 2007 budget adopted by the Board of Trustees. This document represents the expenditure plan for the delivery of municipal services and capital improvement needs for the Village of Morton Grove in 2007. The budget attempts to serve the following basic purposes: Financial – Line item detail of the 2007 budget is provided by fund, including revenues and expenditures. This detail includes records of actual for fiscal year 2004 and 2005; projected for 2006 and budgeted 2007 expenditures and revenues. Informational – Summary information identifies ongoing departmental activities and major goals and objectives for 2007, as well as some of the accomplishments of 2006. As the budget is an opportunity offer a financial snapshot of the Village’s fiscal condition, this budget will also address such items as pensions, debt service and the Waukegan and Lehigh/Ferris Tax Increment Financing Districts. This budget reflects the work of department directors and their staffs in constructing the operation and expenditure plan of the Village for 2007. Their work is greatly appreciated. I would also like to recognize Marlene Kramaric and Susan Lattanzi of the Administration Office. Special recognition is made to Daniela Partipilo, Finance Director, and Steven Drazner, Assistant Finance Director, for their work in the construction of this document. Respectfully Submitted, Joseph F. Wade Village Administrator FY 2006-07 Budget Overview The total proposed budget including all expenditures and interfund transfers is $53.34 Million , an increase of 10.79% above the 2006 budget of $48.15 Million. The General Fund budget, which includes the basic operating expenditures of the Village from administration, public works, police, fire, building and senior and family services departments is $24.07 Million, which is an increase of 11.91 % above the 2006 budget. Much of this increase can be attributed to pension funding, the inclusion of Dempster Street improvements, the incurrence of debt obligation for the recently purchased Domicile Furniture property within the Lehigh/Ferris Tax Increment Financing District, and additional infrastructure improvements. The 2007 budget represents a drawdown of undesignated cash balance of $1.4 Million. This planned drawdown will reduce the anticipated year-end 2006 balance from 29 per cent of the 2006 operating budget amount to 23 per cent. This drawdown provides appropriations for solid waste collection ($235,000) and street resurfacing and reconstruction ($700,000). No additional personnel are included in this budget. The most significant area of increase in this budget above 2006 is pension fund contributions. The 2007 budget includes an increase of $982,918 above the 2006 budget for police and fire pension fund contributions. Significantly, this 2007 appropriation represents 100 per cent of the 2007 actuarially required payment to these funds as required by Illinois law. The year-end 2005 actuarial evaluation of the Village’s pension funds conducted by Goldstein & Associates reported the funding levels of the pension funds as 59.55% for the fire pension fund and 69.34% for the police pension fund. State law requires that these funds be 100% funded by the year 2033. Additionally, the law requires that annual contributions required to attain this goal be 100% of the amount designated by the municipality’s actuary. As the Village’s history of annual pension fund contributions has been less than 100%, it is anticipated that pension funding will remain a very significant expenditure of the Village for year’s to come. In 2007, funding for all pensions of the Village is anticipated to represent 12.29 % of anticipated Village expenditures. Capital Projects and Expenditures The 2007 budget includes a significant increase in the area of capital projects and expenditures, specifically in the area of street resurfacing. The budget proposed by staff included the resurfacing of Shermer Road, from Golf to Dempster. This project is to be undertaken in 2007 with the use of federal funding through the Surface Transportation Program The Village’s share of this grant program is 30% of the total project cost, which is estimated at $562,000. Additionally, the staff proposed budget included the resurfacing of Osceola Avenue, from Beckwith to Foster. After Board of Trustees review and direction, street improvement program funding was increased to include the reconstruction of Greenwood Avenue, from Oriole to Ozark, and the resurfacing of Main Street, from Linder to Long, and Linder, from Church to Emerson. Funding for street improvements has been increased by approximately $473,000 in this 2007 budget above that of 2006. Other capital expenditures of particular note include the replacement of a 1981 front end loader in public works, a 1984 flat bed truck (a converted fire department ambulance), a 1995 utility vehicle in the water division, and a 1995 fire department command vehicle. The replacement of these vehicles is budgeted at $276,000. As the Village has developed a satisfactory fund balance, these vehicles will be purchased in 2007 without financing. In recent years, the Village’s financial condition has required that vehicles be purchased with installment loans, which has added a notable cost to the purchase price of fleet replacements. Other Notable Expenditures While the great majority of the 2007 budget reflects nominal change above the 2006 budget, there are a few areas that merit specific attention. The Village’s payment to North Suburban Emergency Communications Center NSSEC has been increased by $116,250, reflecting an increased share of activity as a part of the central dispatching system. Increases in health and liability insurance have been on a substantial rise since 2001. The Village’s liability and workers’ compensation cost has increased approximately $180,000 from the previous fiscal year. Health insurance costs have also increased in double digit percentage. The Solid Waste Financial Assistance Program has been modified and expanded with this budget into the Emergency Financial Assistance Program. Eligible households participating in this program can receive up to $300 once per year in an effort to relieve the stress caused by financial hardships. A new initiative, the Dempster Street Façade Maintenance Program, has been included in this budget. This program is intended to promote reinvestment in the Dempster Street central business district through a matching grant program providing for façade improvements. An amount of $10,000 has been budgeted to develop design guidelines for the District, and $75,000 has been budgeted for the matching grant program. Finally, as referenced earlier, the 2007 budget contains a Village contribution to solid waste collection. In 2007, the Village is scheduled to pay 45% of the total cost for waste removal, up from 31% in 2006. Grants The Village has had considerable success in obtaining grants from federal and state sources. This year, the fire department obtained a multi-purpose “quint” vehicle which serves as an engine and raised-platform rescue and firefighting vehicle. This grant was obtained in 2005, but the vehicle and funding was delivered in 2006. The value of the grant to the Village was $ 350,000 . Additionally, state grants were obtained for new and reconditioned emergency weather warning sirens, and neighborhood street lighting. In 2006, the resurfacing of Harlem Ave. was assisted through a surface transportation grant. Grants also assisted the development of the public parking lot at 6101 Dempster. Grants often overlap multiple years, with the application and award period encompassing one year, and appropriation and construction encompassing succeeding years. Revenues Total General Fund Revenues are budgeted at $22,635,189. The largest source of revenue is the property tax at $7,674,517 (33.91 % of the General Fund budget) sales tax which also includes the Village’s Local Home Rule Sales Tax, at $5,651,443 (24.97 % of the General Fund budget), utility taxes, at $2,279,000 (10.07 % of the General Fund budget), and Illinois State Income Tax Distribution, at $1,778,000 (7.86 % of the General Fund budget). 2007 Goals Included with this budget is a brief description of departmental goals and objectives. Citizens are encouraged to review these goals and objectives to gain an understanding of department activities. Additionally, the following goals are specifically referenced which will have a significant bearing for the operation and condition of the Village for years to come: *Plan for the continued annual funding of pensions at 100% of the actuarially required amounts. *Restore a method for fleet replacement to mitigate undue stress on the General Fund by stabilizing expenditures to alleviate “spikes” in equipment funding and the need to procure credit for the purchase of vehicles. * Work toward maintaining and/or improving street conditions with a well planned resurfacing and/or reconstruction program and address other infrastructure issues with a similar intent. The expenditure and work plan provided for in the FY07 Budget will make for an interesting and productive year for the Village of Morton Grove. Financial Overview The Village’s cash balance has shown a steady increase since 2003, resulting in a drawdown for the FY07 Budget. Fiscal year ending December 31, 2003, the Village had a low cash balance ($915,285), but has managed to increase cash in the General Fund to just over $5 Million as per the audit for fiscal year ended December 31, 2005. The projected cash balance in the General Fund for fiscal year ended December 31, 2006, is $6.2 Million or approximately 29% of General Fund expenditures. The chart below details historical cash balances for the General Fund. The largest cash balances are within the Trust and Agency Funds, represented by the General, Police and Firefighters’ Pension Funds.