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DeKalb could see property tax rise

State of city’s finances may bring increase into play

Published: Thursday, May 15, 2014 11:41 p.m. CST • Updated: Friday, May 16, 2014 12:24 a.m. CST

DeKALB – Pensions, past building projects and new vehicle purchases are creating a drag on city finances and could force DeKalb leaders to consider a property tax increase.

The $35.2 million general fund shouldn’t be covering costs in other city funds, City Manager Anne Marie Gaura said. About $4 million will be used for that purpose in fiscal 2015, however.

“In other words, the general fund is not able to fund over $4 million of basic operations because revenues from the fund are being diverted to prop up other, nonsufficient funds,” Gaura told aldermen Monday.

In the fiscal year that will begin July 1, the following funds will receive money from the general fund: public safety building, fleet replacement, equipment, airport and general fund debt services funds as well as retiree health insurance and deferred compensation contributions.

With the exception of the debt service fund, expenses in these funds are covered by a variety of sources such as service fees or taxes. Debt service could be covered by property taxes, but the city hasn’t implemented a levy for that.

One of the interfund expenses, a $607,000 balloon payment for hangars built in 2004 at the DeKalb Taylor Municipal Airport, will create a deficit of about the same amount for the city’s general fund next year.

The city will levy about $3.5 million to cover police and fire pensions this fiscal year, but it only funds 31.6 percent of Illinois Municipal Retirement Fund costs and 94 percent of Federal Insurance Contributions Act costs. The city will need to bolster the level it supports those funds in the future, Gaura said.

The police pension fund is funded at 60 percent and the fire pension fund is at 43 percent, but Gaura recommends the pension funds be funded at 90 percent by 2040. The city would have to cut expenditures or increase taxes to get to that level, based on recommendations from the financial review done last year by Executive Partners, Inc.

Gaura also is concerned about using sales tax and other unpredictable revenues to cover debt. Gaura cited the EPI study, which suggested a property tax increase could be necessary to fund the city’s debt related to buildings and other assets, such as the police department.

Mayor John Rey said he wouldn’t be readily supportive of a property tax increase, instead suggesting the city carefully look at capital projects and identifying what, if any, operations could be cut.

“I think we’re going to have to take a very careful look at where reductions can be made in operating functions to ensure efficiencies are brought to the equation,” Rey said, adding he did not think sweeping personnel cuts would be considered.

Cutting three positions is on the table, though. Aldermen are considering laying off the city’s building inspectors, contracting out the service and hiring two part-time property maintenance inspectors.

Although officials haven’t made any decisions, Ken Anderson, local representative for the American Federation of State, County and Municipal Employees said he thinks the city will follow through with the layoffs, calling the move a “surprise attack.”

“I’m holding out hope, but quite honestly, I think this is a movement that some people are behind and trying to promote,” Anderson said. “To reverse course? There might not be a face-saving way to do so.”

Where the money goes

Transfers and direct payments from DeKalb’s general fund include:

Health Insurance Fund: $435,500

Public Safety Building Fund: $400,000

Fleet Replacement Fund: $162,500

Equipment Fund: $35,000

Airport Fund: $730,000

General Fund Debt Services Fund: $1,010,200

Retiree Health Insurance: $863,563

Deferred Compensation Contribution: $375,000

The DeKalb City Council and the Finance Advisory Committee will hold a joint budget workshop at 8:30 a.m., Saturday at the DeKalb Municipal Building, 200 S. Fourth St..

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