DeKALB – City officials face an arduous budget season trying to make the city of DeKalb financially viable.
During their Monday discussion of the budget for the fiscal year that starts July 1, DeKalb aldermen were told the city will need to cut services or boost revenue in order to maintain operations in the coming years.
Beginning July 1, alderman were told, the city should shift its structure and look at the way the general fund is used.
“The main thing is the current structure of how everything is put together is not sustainable,” City Manager Anne Marie Gaura said. “Something has to change and that will require policy decisions in the coming months and coming years on how to address this long-term.”
The city is projected to spend $79.2 million, including $35.2 million from its general fund fiscal 2015. During the same time, the city will bring in $34.6 million in revenue to the general fund, leaving the city with a roughly $600,000 deficit.
The deficit is tied to DeKalb using $607,000 to pay off a bond from 2004 that the city used to add hangar space at the DeKalb Taylor Municipal Airport. Assistant City Manager Rudy Espiritu explained the city has been paying only interest on that bond, but the principal is due Jan. 1.
The city had planned to use tax increment financing funds to pay off the debt, but decided instead to use the general fund based on advice from the attorney the city uses for TIF matters.
Gaura laid out several problems with the city’s operations including the use of $4 million from the general fund to support nine other funds that are not self-sufficient. Further, Gaura said, property taxes don’t fund the city’s pension obligations, and the city doesn’t have a dedicated and permanent source to repay long-term debt or capital projects.
All of the issues will have an effect on the city’s goal to have a reserve general fund balance of 25 percent of expenditures.
Based on projections, the general fund balance at the end of next fiscal year will be about $5.2 million, about 15 percent of expenditures and $600,000 less than what the fund balance is projected to be at the end of the current fiscal year.
Also up for debate this budget season will be cutting the city’s use of a lobbyist and economic development consultant to instead create a management analyst in the city manager’s office and create a community development director to lead a new community development department.
Aldermen also will look into contracting out code and building inspections and adding two part-time property maintenance inspectors.
First Ward Alderman David Jacobson pleaded with his fellow aldermen to consider the city’s financial straits as budget discussions continue, applauding staff for presenting a realistic financial picture.
“I think this is the first cycle that we’re admitting to some of our shortfalls and competencies that we have looked past,” Jacobson said. “To read through this just as a standalone without any numbers, it seems pretty grim, pretty scary.”