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State Shared Revenues and Future Budget Projections
March 3, 2009
Why are we talking about this?
• Major economic events have occurred– Pension investment losses– Flat inflation with contractually obligated
increases
• These economic events have a large negative impact on revenues and expenditures
• Budget shortfalls compound
The impact on the 2010 General Fund
-$140
-$120
-$100
-$80
-$60
-$40
-$20
$0
$20
State SharedRevenues
Property Tax Cap
Police PensionContribution
Forestry Lift
Telephone Savings
Bottom line impact for 2010
Revenues Expenditure Net Change in Fund Balance
November Estimate
$8,538,416 $8,646,110 ($107,694)
Changes ($197,460) $29,723 ($227,183)
February Estimate
$8,340,956 $8,675,833 ($334,877)
The next shoe to drop… IMRF
• IMRF will release the 2010 rates in April• 2008 investment returns of -24.8%• Actuarial (rate setting) techniques modified
to mitigate rate increases• Our 2010 rate will be at least 8.33%, which
would be a $12,500 increase to the General Fund over projections
• If the rate is 10%, General Fund impact would be $38,000
It may not be over…
• Future investment losses– IMRF– Police Pension
• State legislation– Reducing or eliminating shared revenues– Possible relief for governments: proposed
legislation removing Police Pension and IMRF levies from Tax Cap. Passage is unlikely.
We are fiscally conservative, but realistic• Revenues
– use verified sources and actual data whenever possible
• Expenditures– wages are budgeted as actual estimate – no
rounding up.
5 Year projections
• Necessary to gauge the near and long term outlook of Village services
• Estimates use current (2009) levels of service
• Revenues and expenditures escalate at known amounts if possible, or historical trends
• Near years are more reliable than out years
Notable assumptions: 2010-2013
• Property tax: increase by 0.1% in 2010, 3% thereafter
• Police Pension contribution increases by 32.3% in 2010, 13% thereafter with positive investment income
• State shared revenues growing at moderate 3%• Recreation is at current expenditure levels with
increased revenues from additional fees• Museum funding exists at current level• Sales and other taxes growing at modest levels,
2% to 3%
Fund balance – our savings account
12-31-2009 Projected Reserves (in thousands)
$2,027
$440
$195
$1,138
Cashflow Debt ServiceMisc. Undesignated
Current Village Policy• 25% of expenditures are set aside
for cash flow purposes (Cash Flow Reserve)
• Some dollars are for restricted purposes (Fire insurance, Police forfeitures, etc.)
• Undesignated reserves are available for any purpose
• Reviewed every 2 years• Projections are based on 2008
unaudited projections and will be adjusted upon completion of the financial statements in June, 2009.
5 Year Revenues, Expenditures and Changes in Fund Balance
-$2.00
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
2009 2010 2011 2012 2013
Revenues Expenditures Net ChangeIn millions
Available Reserves (as a % of expenditures)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
2009 2010 2011 2012 2013
Cashflow + Undesignated Policy
Cost control measures
• Continue to review all purchases
• Contractor/ vendor reselection (per review schedule presented to the board last year)
• Competitive bids / requests for proposals to secure low cost providers
• Joint purchasing through WCMC, State and others to achieve economies of scale
• Strict enforcement of purchasing policies
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