Members of the Litchfield City Council heard from Budget Officer Jereme Zook during their meeting on Thursday, March 18, as Zook presented the proposed 2021-22 and 2022-23 budget for the City of Litchfield.
Zook said that the pandemic had a significant effect on the city’s budget, with less sales revenue, fewer hotel stays resulting in fewer tourism dollars and continued need of services despite the loss of revenue. This has caused the general fund cash balance to decrease.
A 2004 Litchfield City Council resolution calls for the city to have 25 percent of recurring revenues in the general fund, which the city did in the fiscal year ending April 30, 2018, with $1,680,139, 27.8 percent of recurring revenues. Due to projects and the start of the pandemic, the fund balance was down to 20.2 percent at the end of the April 30, 2019 fiscal year and dipped below 15 percent for the fiscal year ending April 30, 2020, moving to 13.2 percent.
The proposed budget calls for a small surplus of $35,500 to help build the balance up to 15, but Zook said it will take several years to get back to 25 percent of reserves.
To help make up for the downturn, the city reduced spending on the equipment replacement fund and budgeted for an increase in the real estate tax levy for the ambulance fund. An increase in tax funds from the sale of cannabis is also budgeted in.
A 12 percent increase in the sewer rate is also planned to help move that fund to the positive. Zook said the sewer plant has some large expenditures, but the plant itself will be paid off on Dec. 21, which is a big positive.
Other possible assistance could come from a federal relief bill, but the bill was approved after the budget was completed, so any relief would be a bonus.
Zook said that there has been a lot of scrutiny about spending and what purchases are necessary, but he believed that the department heads did a good job taking the city’s financial situation into account.
That will have to continue as a decrease in the capital sales tax of 6.1 percent is projected for this coming year, with modest increases of 1.25 and 1.0 percent budgeted in the following two years.
Alderman David Hollo asked if the city would have to look at reducing personnel if the budget situation does not improve. City Administrator Tonya Flannery said that there are many difficult decisions the city will have to face if that occurs.
Mayor Steve Dougherty said that when he became mayor eight years prior, the city was close to that 15 percent mark and he was confident that they would be able to build reserves back up to 25 percent again. The full budget can be viewed at cityoflitchfieldil.com.
The council also heard from Shannon Hall of Diamond Brothers Insurance regarding the renewal of health insurance for city employees through Blue Cross Blue Shield, effective May 1, 2021 to April 30, 2022.
Hall said that the city is facing its second straight year of a significant increase, with the rates increasing by just over 15 percent. She said that the insurance company lost $260,000 on the group and over $500,000 over the last two years, which limits the city’s bargaining power for a lower rate.
Hall said the original increase was for 26 percent, so she believed that a 15 percent increase was still relatively manageable and that the plans offered by Blue Cross are still good when looking at other options. City employees can currently chose plans that fit their budget and medical expenses ranging from $62 to $380 per month after the city contributes its share.
The motion to approve the renewal was one of five that passed, which includes the approval of the minutes from the previous meeting.
Other motions were to approve the sale of city property (1007, 1009, 1010 and 1013 South Walnut) to William R. and Evia L. Dyer, to approve a downtown facade grant application for ECCR Properties for up to $2,593.85 for work at 307 North State Street and to approve an operating agreement with American Shoreline Solutions for the use of the Westlake Trail lakefront parking area in exchange for shoreline revetment or breakwater installation at Lake Lou Yaeger.
At the start of the meeting, Mayor Dougherty announced that city hall would be reopening on April 1, and would be following the guidelines put forth by the Center of Disease Control.
The meeting would enter closed session at 8 p.m. with the council set to meet next on Thursday, April 1, at 6:30 p.m.