Flossmoor’s finances are trending better than budgeted for the current fiscal year, but the village’s short-term savings come with some concerns about long-term sustainability.
So says a fiscal year 2023 mid-year financial review delivered by Village Manager Bridget Wachtel on Monday, Feb. 20, to the Flossmoor Village Board. The village’s fiscal year runs from May 1, 2022, to April 30, 2023, meaning discussions of the FY24 budget are soon to follow.
“This is a good time to check in on how we’re progressing for the year and receive any feedback from the board,” Wachtel said.
The purpose of the mid-year financial reviews is to analyze revenue and expenditures to date as well as project how those numbers are expected to trend for the remainder of the fiscal year, Wachtel said. The focal points of the review are the general fund and water and sewer fund, the two largest operating funds for Flossmoor.
Flossmoor’s budget has felt the impact of the struggling economy and stagnation of real estate activity, along with the impacts of the pandemic, inflation, supply chain issues, state legislative decisions and more, Wachtel noted. Those circumstances and the village’s need to draw down its fund balance to support operating costs threaten Flossmoor’s ability to continue to pay for capital projects through a save-and-spend philosophy, Wachtel explained.
In the general fund, the village budgeted for an $859,598 operating deficit, but it was expected to use roughly $2 million in fund balance to help support the budget when including capital and non-operating expenses, including water meter replacement at $1.4 million.
The good news is that the mid-year review anticipates an operating surplus of $335,119, Wachtel reported, with roughly $200,000 more in projected revenue and an overall short-term savings of $2.71 million. Expenditures were “significantly less” than what was budgeted, Wachtel said, with a lot of that being tied to capital and non-operating expenses not moving forward.
The village also saw a boost in property, sales and income tax growth. Revenue produced by a Dunkin location and The Center for Dental Excellence expansion helped, Wachtel said.
“We’re seeing some really positive projections, quite frankly,” she said.
The fund balance is now expected to grow from $5.61 million to $8.52 million by April 30. But some recent staff vacancies and grant support have factored into all of that, Wachtel explained.
“This is obviously a very short-term improvement compared to budget,” she said. “But … when you take a look at being at full staff and supporting all of our operations and trying to move forward with cash on-hand to support our capital projects, the revenue-expenditure equation is not sustainable long-term.”
The water and sewer fund was budgeted for an operating surplus of $638,891 for FY23, which is now projected to increase to $673,906. That is in part thanks to Flossmoor’s change in FY23 to a new water supplier.
“We’re seeing some immediate savings as a result of that water supply contract with Homewood and consequently Chicago Heights and Hammond,” Wachtel said.
But the water and sewer fund did not make a typical administrative transfer to the general fund, because the former was not able to meet its reserve policies. And while its fund balance is expected to increase from $1.6 million to $1.7 million as of April 30, Wachtel said that is not enough.
“That’s certainly a healthy number, but that’s not sustainable to help support the capital investment that’s needed in the water and sewer fund,” she said.