Homewood is preparing to adjust to the financial impact of the economic shutdown.
Finance Director Dennis Bubenik presented the village board with an outlook for the town’s 2020-21 budget at its April 14 meeting. The final draft will be present to the board for a vote on April 28.
After the initial budget planning meetings were held, Bubenik said the first draft had a $264,108 deficit. Adjustments turned that into a $348,140 surplus.
“Then the coronavirus pandemic and economic shutdown hit,” Bubenik wrote in a village memo. “The budget was thrown into complete review of all revenues and all expenses. It’s something we’ve never seen before.”
Bubenik listed options for balancing the budget that included layoffs, program cuts, new revenue sources, accounting changes and using the village’s available fund balances. He said all five were used in some capacity during the 2008 recession.
“All I can say is, from a budget standpoint, the last month has been extremely challenging,” Mayor Richard Hofeld said. “It’s like handling Jell-o.”
Homewood’s largest sources of revenue, Bubenik said, are sales, property, utility, income and places for eating taxes.
The budget was reworked with $1.2 million subtracted from the revenue side. That’s how much sales tax revenue came in during March, April and May 2019. Because Walmart, Jewel, Target and Walt’s have all remained open and have remained busy, $500,000 was added back in.
Sales tax from car sales was also cut for that three-month period and reduced by half for June, July and August. Similar calculations were done with restaurant sales and places for eating taxes and income tax.
Two new revenue sources were added for the motor fuel and recreational cannabis taxes, neither of which were a part of last year’s budget.
All told, the final estimated reduction due to the economic shutdown was $1,404,255, or 6.3 percent.
Potential cuts to help make up that gap included things like pavement marking and improvements, public works and police vehicle purchases, sidewalk replacement and hiring part-time police officers. Some of the items that would see reduced spending were tree trimming and removal contracts, residential and commercial grass cutting, shopping cart retrieval, fire engine parts and upgrades, cancellation of various events and the leaf pickup program, which would be reduced from three weeks to two.
Even with those cuts, the deficit was still $292,329, which would be covered by the fund balance. The village has about $4,814,858 of unassigned general fund balance available. That’s about two and a half months’ worth of operating expenses.
Village Manager Jim Marino also listed other potential cuts, including a $9,200 reduction in a public relations contract and a reduction in hours for one staff member whose duties have been reduced because of COVID-19 mitigation measures.* He said the village received a U.S. Census grant for over $11,000, which can be added to revenues.
“The economic shutdown provided unexpected budget challenges not seen since 1929. It will take some months to pinpoint the exact effect of the economic shutdown on our revenue streams,” Bubenik said.
* Note: This original version of this story included a broader statement about budget cuts that has been revised to be more precise.