Homewood stands to lose about $900,000 from its annual Local Government Distributive Fund allocation if Republican Gov. Bruce Rauner’s proposed budget is implemented as-is, according to Village Finance Director Dennis Bubenik.
As reported by The Chronicle Feb. 19, Rauner’s budget would cut LGDF payments by 50 percent, and for Flossmoor, that would be about $468,000 in lost revenue.
“While the state tightens its belt, so too must local governments and transportation agencies,” Rauner said in his budget address Feb. 18. “The state currently transfers $6 billion every year to local governments. Those governments are currently sitting on more than $15 billion in cash reserves.”
It’s too soon to say whether Rauner’s proposed budget will be adopted, and observers say it is unlikely to be adopted unchanged considering the Illinois legislature is dominated by Democrats. Homewood officials are taking a wait-and-see approach for now.
Village President Richard Hofeld expressed confidence in local state representatives and senators to address the governor’s budget proposal.
“(They) are very cognizant of the needs of their municipalities,” he said. “I’m sure they will represent us well.”
Smaller municipalities are expected to be hit hardest by the proposed cut to LDGF, but even communities like Homewood that might be better able to weather the cuts likely will resist.
“We run things very efficiently,” Hofeld said. “Municipalities shouldn’t be penalized for having their affairs in order.”
Even though $900,000 would be a big cut — 5 percent of Homewood’s total budget — the village has a number of options to deal with the loss if it happens and village officials will look at them all, according to Bubenik.*
He said there are five general options for elected officials to consider. Listed from most extreme to least extreme, they are reducing staff, reducing expenses by cutting programs, finding new revenue sources, increasing efficiency and depending on reserve funds to make up for lost revenue.
During the recession that began in 2008, Homewood used all those options to some degree, he said.
“Everyone talks about layoffs, but that’s the most extreme,” he said. “There are other things to do before layoffs.”
Hofeld confirmed there’s no danger of Homewood laying off workers any time soon.
Although the village is still feeling some residual effects from the recession, the reserve fund balance has been built back up to the 25 percent threshold — it is village policy to have 25 to 50 percent of the annual budget in reserve — and that gives the village some breathing room.
“The least extreme option is just to use any funds you have on hand,” he said. “You can’t do it forever, but that allows you time to think about these other options.”
Homewood currently has about $4.6 million in its reserve fund.
* This passage was revised for clarity.
Related stories:
Rauner budget plan would trim Flossmoor revenues by $468,000 (The Chronicle, Feb. 19, 2015)
Rauner budget would take millions from local (The State Journal-Register, Feb. 19, 2015)
More information:
Full text: Illinois Gov. Bruce Rauner’s budget address (Crains, Feb. 18, 2015)
Contact Eric Crump at [email protected]