Last Monday, we had a special budget meeting to discuss the capital budget which focuses on our investment in capital assets such as buildings, streets, parks, vehicles, etc., as opposed to our operating budget that focuses on day to day operations and maintenance. Six of us were in attendance, with Jim Dodge missing due to other commitments. This was a discussion and not a final vote on any budget items.
Village Manager Joe LaMargo opened the meeting by saying that staff is still looking for $433,000 in additional reductions in the operating budget. More on that later. Generally, we had a good discussion on the capital budget. Staff presented it with baseline priorities and then additional priorities if we provided more funding sources.
There were several additional discussion items. We discussed fixing our parks, of which we were replacing equipment in one for next year. An issue we are facing is that many of our parks were built during the same time period and as of January 1, 56% of our parks will be over 20 years old. Because, we have 64 parks we will likely need to accelerate the replacement of our parks. Trustee Calandriello suggested that we borrow money to do this.
Staff indicated, and I agree, that this would not be a good use of debt for several reasons. First, if we fix a lot of parks in a short period of time and not on a consistent schedule, we will put a future board in the same position that we are in. Second, we only have the capacity to fix about 6 parks per year. Third, the parks are safe. Older equipment does not mean that it is a safety issue, which neither staff nor the board would tolerate. I pointed out that we need to develop a long-term plan for fixing our parks on a consistent schedule. Staff indicated that we have a study in the budget next year to develop that plan.
This brought up the subject of taking debt out to accelerate the repair of our roads. Our Public Works Director and Finance Director agreed that this would be a better use of debt, because in the long-term, fixing streets sooner would save us money by extending the life of our streets. Currently, there is an on-going study to develop this plan. I informed the Village Board and staff that I would support using debt if there is a business case to be made that saves us money in the long run. This is the proper use of debt and our strong credit rating. Trustee Calandriello disagreed and said that “We are the Village of Orland Park, not the business of Orland Park.” On this, he and I disagree. I want to fix our parks but believe we should use debt if it saves us money in the long run, helps us generate economic activity that results in a net financial benefit to the village, is an emergency, or is a life-safety related issue.
During our discussions, I discovered that the maintenance we do on our landscaping medians is part of our capital budget. For some reason, this slipped past me last year. However, I think this should be part of our operating budget. I was informed, that historically this is what we have always done. I feel strongly that this not correct, but it would be change in policy. I agreed with the Trustees that making this change this year, while making other cuts, would be a challenge and delaying this change until next year is reasonable. Staff indicated that there are a few other items similar to this in the capital budget. They committed to providing us a list of all of these “on-going operating expenses” that have traditionally resided in our capital budget. I will work on making these changes in the future to force efficiency improvements in our day to day operations and free up capital for our infrastructure.
Trustee Carroll asked the board to commit to a restaurant tax of 1% that was proposed as an additional capital funding source. He also suggested we could make it 1.5% and put 0.5% towards our operating budget. He also asked us to commit to the operating budget revenue requests as well. We know that approximately $270,000 in gaming revenue is included and that we all approve an increase in hotel tax to match our neighbors (from 4% to 5%). Trustees Gira and Carroll were OK with the restaurant tax. Trustee Calandriello was OK with the revenue from either the restaurant tax (or some other source). Trustees Ruzich, Fenton and I did not agree and believe that new taxes are a last resort. I also reminded the Trustees that the restaurant tax was studied at the time of the gaming revenue study which indicated that the Village would see a net loss due to reduced economic activity if a restaurant tax was added.
After these discussions, the board agreed to the baseline priorities. Of the additional projects proposed, the board also agreed that the first priority would be approximately $150,000 in technology spending that would increase efficiency and save money in the long run. I believe that we can find those dollars without adding a new restaurant tax.
The Village Manager, then asked for the Village Board to commit to $1.04 Million in additional revenue for the operating budget. I responded to this and his earlier statement that staff was tasked with finding $433,000 in additional expense cuts. I reminded the Village Manager that when this process started we asked him for $2 Million in cuts and $2 Million in revenue. At the next meeting, he presented a request for $4.3 Million in revenue. The Village Board left $3.5 Million on the table for hypothetical discussion but reminded him and staff that we wanted $1 in cuts for every $1 in revenue requests. At the last meeting, he presented $1.27 Million in operating cuts and made $1.587 Million in revenue requests. We then asked for $500,000 more in cuts not $433,000.
Village Manager LaMargo said that staff needed us to commit to the $1.0 Million in new revenue. Trustee Carroll said that at the revenue hearing we committed to $1.04 Million in revenue and we needed to stop this “3 ring circus”. Trustee Carroll also indicated that staff could not keep doing this without a commitment from the board.
I pointed out that when the Board is given revenue requests and expense cuts that total to exactly what we need, then the Board is not being given choices. It is up to the Village Board to prioritize, not staff. At the previous meeting we asked staff to find $500,000 more in cuts and also include revenue sources (such as sponsorships) that were brought to zero for the revenue hearing. Between those two changes it would give the board more expense cuts and revenue options than needed. At that point, the Village Board can prioritize our options.
Trustee Gira then stated that we should not hold staff accountable for sponsorship revenue from year to year because they wouldn’t try to get new revenue because they would be held accountable for it in the future. She also stated that she didn’t want to see special events that were supposed to be budget neutral but were not guaranteed (this was a swipe at the Centennial Park West paid concerts). Village Manager LaMargo then stated that there were no new special events in the budget. In other words, he has taken it upon himself to remove the Centennial Park West Concerts that the board gave approval to start booking over a month ago and is doing nothing to book those concerts.
Upon reflection, I wondered why the operating budget and revenue request were inserted into our capital budget discussion. It was clear that is was put in place for a few Trustees to make some points. It is unfortunate that an otherwise productive meeting lasted an additional 45 minutes and changed nothing. At the end of that time, we remained in the same place – find additional non-tax revenue sources, $500,000 in additional cuts and the Village Board was not committing to more revenue.
Overall, the goal of the night was to discuss our capital budget and the Village Board came to agreement on the capital budget proposal and the first priority if additional funding is found. I am an advocate for transparency, so I encourage all of you to come to our budget hearings (or watch on Facebook Live) as you will get a better sense of how the Village spends our money.
There are several upcoming meetings and events:
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