Village Manager Bridget Wachtel’s message to the Flossmoor Village Board during its first public look at the fiscal year 2024 budget has been a common refrain for the municipality as of late: good news for the short-term, mixed with cautions about future sustainability.
Wachtel on Monday, March 6, presented the preliminary fiscal year 2024 budget, focusing on the general fund as well as the water and sewer fund.
“The general fund is supporting the general operating costs of the village — everything from public works to police, fire and general administrative services,” Wachtel explained.
When it comes to that general fund, Wachtel reiterated that FY23 projections are better than the FY23 budget as well as the FY24 preliminary budget. The early FY24 numbers show a “small” operating deficit, Wachtel said, with $12.74 million in anticipated operating expenditures compared to $12.57 million in expected revenues. The total general fund could be looking at $16.65 million in expenditures and $15.66 million in revenues, per Wachtel’s presentation.
Wachtel said that while Flossmoor has adequate fund balance money to close a short-term gap between expenditures and revenues — some of which were planned uses of the fund balance — the village must still be thoughtful going forward about responding to shortfalls.
“The village has a policy, a history, of what we call ‘save then spend,’” Wachtel said. “We’ve been fortunate over the years to be able to save money to be able to support our capital infrastructure projects, our capital improvements, so that we’re not hardly ever going to bond or debt. We’re paying with cash.”
The preliminary FY24 numbers would be $269,277 over FY23 operating expenditures to maintain similar service — “no surprise, given the market that we’re in right now,” Wachtel said — and $1.7 million higher when looking at total general fund expenditures.
Wachtel indicated the total fund expenditure figure is somewhat skewed because it includes roughly $1.5 million for a proposed water meter project.
“The water meter project … really, in theory, should be supported by the water and sewer fund,” Wachtel said. “That fund is not in the financial condition to be able to support such a large cost.”
Revenues also are expected to be up $961,241 in FY24 compared to FY23 operating revenues and $3.05 million overall in the general fund. Wachtel said the numbers of grants impacting the total fund have been “unprecedented” when compared with recent years, with roughly $3 million in grant money anticipated to play a role in the FY24 budget.
Despite high home sales and low inventory in Flossmoor, the Equalized Assessed Value for Flossmoor has not shown “significant” growth since the Great Recession, Wachtel said.
“We’ve got a 2021 EAV that’s trending around 2012, 2004 — around those eras — yet we’re supporting a 2023 budget and record-setting inflation,” Wachtel said.
Sales tax has proven “critical” to maintaining service, as personnel and fixed costs make up 89% of the budget, she added.
“We’ve seen that number as high as 95%,” Wachtel said. “We’re a service industry. Our service is our people.”
Flossmoor has increased its sales tax revenue by 164% since FY18, which was prior to implementation of the village’s non-home rule sales tax, and more than six times what it collected pre-Meijer, Wachtel explained.
“Those are some real statistics to point to the fruit of our labor, so to speak, when it comes to the economic development efforts that we’ve had,” Wachtel said.
The water and sewer fund is expected to see $3.78 million in expenditures in FY24 compared with $4.02 million in operating revenue. But Wachtel continued to caution that Flossmoor’s water and sewer fund is trending away from its recent “healthier” status and remains a concern, with the general fund strained by administrative transfers to help cover costs.
“The water and sewer fund is an enterprise fund of the village, which means that the revenue it’s generating should sustain and support the expenses of the fund,” Wachtel explained.
The Vollmer Reservoir rehabilitation and water main replacement programs have had a positive impact. And the water meter replacement project remains a high priority, Wachtel said, as Flossmoor aims to avoid loss in billing residents for water used. With the recent water supply transition complete, Flossmoor has guaranteed rates for the next 25 years, she added.
“Sitting here in such an inflationary market, that’s a phenomenal accomplishment to know those will be our water supply costs for the next 25 years,” Wachtel said.
Trustees largely praised the work of staff in preparing the preliminary budget.
“We aren’t looking at a budget that pulls numbers from some place,” Trustee Rosalind Mustafa said. “We are looking at a budget that’s thoughtful — well-thought through, well-managed.”
Trustee James Mitros added that while the water and sewer fund has “always been a thorn in our side,” with the the board unwilling to place the full burden of even higher water costs on residents to support the fund, he hopes the water meter replacement project will help to reverse the trend of that fund. And he sees positives in the budget, too.
“All in all, we are still … a fortunate community compared to many,” Mitros said.
The preliminary budget for FY24 — which spans from May 1, 2023, to April 30, 2024 — is subject to board input on modifications until the final budget is prepared for adoption in April, Wachtel said. Additional budget discussions are slated for March 20, April 3 and April 17. Wachtel added that water and sewer rates will be discussed at the first meeting in April.