The COVID-19 pandemic may reduce Flossmoor’s village revenue by $573,384 in the next 12 months, according to the municipal budget for the 2021 fiscal year.
The village board unanimously approved the annual budget at the April 20 regular meeting. The total budget is $29 million, designating $13.1 million for the village’s operating fund and $3.9 million for the water and sewer fund. Those are the two main village funds, with the operating fund covering most day-to-day expenses.
It goes into affect May 1 providing funding for village programs and services, including the police, public works and administrative staff, along with water and sewer operations.
The budget’s anticipated revenue losses are largely due to the state’s current stay-at-home order with “a gradual return to normal social activities during the summer months,” Village Manager Bridget Wachtel said in a news release.
Affected revenues include sales tax, state income tax, video gaming tax, motor fuel tax, court fines and administrative tow fees.
The village’s FY21 expenditures exceed what it will make in revenue, but the village’s adequate fund balance will assist in covering revenue gaps. Several factors contribute to the additional expenditures such as the economic impact of the pandemic, carryover funds for projects that weren’t completed in 2020 and planned capital projects.
“More so than usual, consistent monitoring of our revenues, expenditures and cash flow will be necessary, and we will need to remain flexible and ready to adjust to budget amendments that reduce expenditures,” Wachtel said.
Despite the pandemic’s implications on the economy, Flossmoor’s financial health is strong, Wachtel said, noting the village’s capability to fund the shift to a new water supply source and the processes needed to do so. Flossmoor is studying the feasibility of shifting its source of Lake Michigan water to Hammond, Indiana via Chicago Heights. It currently gets lake water from Harvey via Homewood.
“The village’s strong fund balance, which is a product of prudent fiscal management, will allow the village to continue to provide its operations and basic services should the revenue loss be greater than anticipated,” she stated.
To help cover the cost of its projects and programs, the village is actively seeking grant funding. It has been awarded the FEMA US Digital grant and a CMAP Local Road Safety grant which has not yet been received. The village also has other pending grant applications.
Nonetheless, village staff has begun outlining a contingency plan in the event of financial pressures imposed by the pandemic. Projects in the budget that don’t have grant funding and would be placed on hold include improvements to the village hall, security and fencing around the public works complex, the replacement of board and committee room furniture and water meter replacement. Those savings are approximately $1.8 million.
Additionally, the village would look to defer capital equipment replacement if need be. The village’s last resort would be to cut operating budgets, programs and services.
Wachtel said these measures would be a short-term response to sustain operations. However, she added that the village, so far, is in a good position as it faces financial challenges.
During the board meeting, Mayor Paul Braun said the village is taking a measured approach to its budget as it prepares for unforeseen economic challenges.
“The primary goal for the next 12 months is to keep services going forward,” Braun said. “We are very lucky and pleased to tell the public that we have not had to lay off any staff at this point.
“We changed work arrangements around but we are managing with a full staff, we’re managing to keep everyone employed, and we have managed to keep village services going, obviously under difficult circumstances. This budget is designed to make sure that happens for the next 12 months.”