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Guest essay: Understanding Park Ridge’s budget is key to fixing problems
Updated: April 10, 2012 2:51PM
As covered in the local press, the just-concluded Park Ridge City Council budget process for the 2012-13 fiscal year has raised some questions that residents deserve to have addressed.
First, let’s talk about the overall budget deficit of $4.7 million.
The city budgets for 12 separate “funds” for a variety of special purposes. One of those — the General Fund — acts as the main operating account for day-to-day business. In formulating this 2012-13 budget, the council focused primarily on balancing the General Fund. And it did so, passing a budget that actually shows a $450,000 surplus in that fund, the largest surplus for that fund in more than a decade.
Among those other separate funds, the individual deficits which make up that $4.7 million overall deficit include, primarily, shortfalls of $2.4 million in the sewer construction fund, $941,000 in the parking fund and $552,000 in the library fund. But those “deficits” actually result from spending the substantial amounts of money the city has accumulated in those funds specifically to pay for needed sewer, parking and library-related capital projects.
In fact, the money in most of those funds cannot be used for other purposes, or diverted to take financial pressure off the General Fund. So the taxpayers need to understand that, when the council decides to spend money from those funds on specific capital projects, the resulting deficits in those funds are not a bad thing. Nor should those expenditures somehow be counted against the General Fund.
Notwithstanding the $455,000 General Fund surplus, however, that fund’s unreserved balance, otherwise known as the city’s “cash balance,” will end Fiscal Year 2012-13 with a reduction of $310,000 to $2.7 million, which is only 36 percent of the city’s target cash balance and represents a mere month of operating cash reserves on hand.
Why is this?
It’s because the General Fund is forced to pay for the annual Uptown TIF deficits, which for FY 2012-13 is forecast to be $773,000 and will thereby increase the TIF’s debt to the General Fund to $5.8 million.
Worse yet, over the next two years the TIF is forecast to accrue deficits totaling another $1.1 million, raising the TIF’s debt to the General Fund to $6.9 million. That could shrink operating cash reserves down to only 21 percent of its target, or less than one month’s worth of operating cash.
Under no rational standard is such a cash position responsible or acceptable.
Simply put, the city has put itself in this dangerous position by years of poor budgeting and incompetent financial management, even as more than a few city officials were boasting about holding annual property-tax increases to a “modest” 4-5 percent. What those officials failed to explain, however, is that despite the last two years of surpluses exceeding $275,000, the city also plowed through $3.6 million of unreserved General Fund cash since 2005-06 — leaving that fund cash-poor in the face of a looming and unrelenting need to continue financing the Uptown TIF deficit that is projected to grow to up to $13 million by 2021-22!
Unfortunately, short of the city winning a hefty MegaMillions jackpot, there is no magic bullet to solve these problems. That means we are looking at a need for even more, and more significant, spending cuts — most likely combined with some additional increases in property taxes and other revenue.
Solving these serious financial problems that grew unchecked over more than a decade will require an unprecedented and an unwavering commitment by this council and future councils. It will also take the kind of strong and innovative management on the part of city staff that we have never seen before.
I encourage all residents to visit the city’s website to view the more detailed information about this year’s budget and the city’s financial outlook. And after doing that, they should not hesitate to contact their elected officials to let them know how they feel about the progress the current city administration is making in navigating this difficult financial situation.
— Daniel J. Knight is the Fifth Ward alderman of Park Ridge, as well as Finance & Budget chairman.
