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Flossmoor financial position better than expected amid pandemic but concerns loom

Flossmoor’s expenses are down and revenues higher than expected thus far in 2020, but while village officials are celebrating those short-term savings, concerns for the future remain.

Village Manager Bridget Wachtel presented Flossmoor’s Fiscal Year 2021 Mid-Year Financial Review during the Dec. 21 regular meeting of the board of trustees, analyzing trends from May 1-Oct. 31, 2020. The village is in a better position than expected, at least for now, she said.

“This is a short-term improvement compared to budget,” she said.

This is in contrast to worries she said officials had back in March, when they had two weeks to look at the budget and provide financial analysis to guess the impact COVID-19 might have on Flossmoor’s financials. 

“It turned into a bleak picture pretty quickly,” she said.

But the only amendments made to the original budget passed in May were a $58,000 increase in expenses, because engineering services were not originally included for Hagen and Douglas flooding work. The Village originally projected the use of $2.51 million in fund balance to support the General Fund, $1.60 million of which is attributable to capital and one-time, non-operating projects. Flossmoor is now looking at a $396,676 surplus for its mid-year trend.

Flossmoor is projecting a $5.9 million fund balance as of April 30, 2021, an increase of $2.97 million compared to the original estimate. That is because revenues are expected to be roughly $538,814 more than the village’s amended budget, while expenditures are trending down to the tune of $2.43 million.

Overall expenditures are anticipated to be down $1.7 million in capital and non-operating budgets, $387,000 in public safety vacancies and personnel expenses, $122,000 in public works personnel expenses, and $205,000 attributable to health insurance and other benefit expenses.

In March, staff anticipated an additional $405,740 in operating revenues amid the pandemic, but the trend is greater than that. The biggest revenue boosts for Flossmoor have been CARES Act funding that is anticipated at $221,000, as well as sales, non-home rule and local use tax money projected at $313,000 over budget.

Wachtel called the sales tax figure in particular, which is $162,000 over budget, “fantastic.” She said it is largely attributable to Meijer.

“We also speculate people did additional shopping for a variety of reasons,” she said.

Still, some revenue sources are expected to come in lower for the fiscal year than what was budgeted. Property taxes, for instance, are projected to be $60,000 lower than the budget, with the extension coming in less than the levy for 2019 and no new development in the levy. Wachtel said the village’s Equalized Assessed Value has actually seen two big drops over the past decade.

“It’s notable,” she said, adding Flossmoor is trying to support the work they are doing in 2020 with EAV levels from 2005 and 2011. “That, of course, is concerning.”

She said a 2020 reassessment of commercial properties, what it could mean for economic development and tax appeals are also on their radar.

Court fines are projected to be $46,000 under budget, with courts closed and fewer traffic stops taking place during stay-at-home orders. And the village waived late fees for vehicle stickers because of COVID-19, which is expected to cost Flossmoor $11,000 in revenue. Building permits are anticipated to come in $13,000 under budget.

“We associate that with less work being done this spring and summer as a result of the pandemic,” she said.

A FEMA SAFER Grant is also projected to be $37,000 under budget, according to Wachtel’s presentation. Flossmoor intends to appeal to FEMA for further support, in hopes of being granted an additional $25,000, but Wachtel said that is less of a sure bet than what communities have seen through CARES.

Flossmoor’s board contingency fund is $49,000 over budget because of outdoor dining assistance and referendum education efforts.

“There are many years where not a dollar is spent out of this fund,” Wachtel added.

Roughly $65,000 has been spent on Plexiglas, disinfectant wipes, gloves, masks and other expenses related to COVID-19 mitigation. Liability insurance and workers compensation insurance are $41,000 over budget, and building repairs are $30,000 ahead of budget expenses.

“We’re just seeing the age and wear and tear on both of the buildings,” Wachtel said, of the municipal complex and public works facility.

But Wachtel said Flossmoor is in a good position considering the circumstances of 2020.

“We could be sitting in a whole world of hurt right now,” she said. “I think many municipalities and businesses are. We bought ourselves a little time. … Overall, our fund balance remains very healthy. We have no immediate concern as of today.”

But she cautioned that the village’s financial well-being has been built on strong policies and practices, and officials should focus on addressing the challenges that lie ahead.

“We bought ourselves a little bit of time to adjust some larger, budgetary structural issues,” Wachtel said.

Among them are the water and sewer fund, where Wachtel said the village is expecting a total fund deficit projected at $343,493, which means Flossmoor is drawing down more for capital and non-operating costs than it is saving.

“The health of this fund is becoming a concern again,” Wachtel said. “Water and sewer fund needs to be back on our radar.”

She said deferral of water meter replacement this year helped Flossmoor’s short-term financial position by keeping expenditures down, but that choice has led to higher-than-budgeted emergency repair work and increased water supply purchase.

Billing has also seen an impact. Wachtel added that the village also halted penalties on water and sewer billing through August, and no shutoffs are being done until 2021.

“There’s some direct financial impact of those decisions, too,” she said.

Specifically, Wachtel said water revenues are down by $182,500, while sewer revenues are up $99,000.

Some board members took comfort in the overall picture presented by Wachtel, including Trustee Perry Hoag.

“There are tons of municipalities that would love to be in our position,” Hoag said following the presentation.

But Mayor Paul Braun noted that while the Flossmoor Public Library and other community partners are also “generally OK” right now, these trends are not necessarily an accurate representation of what to expect in future years.

“I think it’s really an anomaly the board can’t take any comfort in,” Braun said. “We have to keep our eye on the ball here for the future.”

Wachtel noted the village’s 2022 fiscal year draft budget is to be presented in March, and this presentation usually serves as the “kick-off” to the annual budget preparation, which is to begin in January. Flossmoor’s fiscal year starts May 1. 

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