Update from Orland mayor Pekau

The only major discussion item from last week’s board meeting was another discussion on next year’s budget.  Additionally, the minutes for the three previous meetings were approved.  This time they were written correctly. The budget discussion was interesting.  Prior to the meeting only Trustee Carroll, as the Finance Committee Chair, was privy to a lot of the information presented to the board by the Village Manager.  In short, we were asked to approve $1.587 million in new tax revenue and were shown $1.267 million in expenditure reductions.  We were also informed that there will be a request for a restaurant tax that Trustee Carrol and Village Manager LaMargo are proposing to be used for capital expenses.  This will be discussed at a future meeting. The good news is if we adjust the budget by the $2.85 million presented, we will maintain a healthy operating reserve for 5 years.  If we do nothing, we will have no reserves for four years, so this great progress.  There was a lot of discussion among the board members.  My comments follow. First, the Village Manager and Trustee Carroll indicated that they needed direction from the board as the direction in the previous two meetings was unclear.  I disagreed.  The direction the board gave was perfectly clear.  In our first budget meeting, we were told that we needed to close $3.2M in operating costs.  We agreed (and directed staff) to find $2M in revenue and $2M in cost cuts. At the next meeting, which was the revenue meeting, $4.3M in revenue was proposed.  These new revenues included: Gaming tax which is already in place Increasing our hotel tax from 4% to 5% - all of our neighbors are 5% or greater so this makes sense Increasing our property tax levy – some increase makes sense to capture the growth of the village over the last 8 years.  From my perspective it’s important to keep the tax rate moving down over time, which means increasing the levy lower than the growth of the village. Generally, the board agreed to the first two and potentially increasing the levy (without yet determining an amount).  Also, we discussed the impact of two new revenue streams: Amusement tax of 4% on entertainment venues Restaurant tax of 1% on food and beverage at restaurants These would be administered and collected by the village.  Hypothetically, if all of these were implemented it would be $3.5 million in new revenue.   The board then directed staff that we would consider these taxes but we wanted to see matching cuts. I think the direction was very clear.  The first meeting the board said $2 million in cuts and the second meeting we said $3.5 million in cuts since more revenue was requested.  We were given $1.267 Million in cuts.  This is not acceptable – the board gave clear directions that weren’t followed.  Village Manager LaMargo then disagreed with me, stating that staff had met the board’s requests by giving us $1.267 million in cuts which was more than the $1.0 million in revenue being asked for.  I strongly disagreed and added the numbers on the slide he just presented.  I made clear that any way you slice it, it was $1.587 million in revenue requests.  He then justified his number by saying that $545,000 is for police pension, saying it is not an operating expense and isn’t part of their revenue request for which they needed matching cuts.  Trustee Dodge and I both made clear that the police pension is an operating expense regardless of what government accounting rules allow you to do.  Personally, I am tired of the shell game. I also made the following things clear: The Village Manager was asking our residents to pay over $1.5 million in taxes The board asked for $2M and then $3.5M in cuts and the Village Manage came back with less than $1.3M in expense cuts. This is not acceptable and it is not what the board directed. We reviewed these cuts in executive session (because many involved personnel) and came out of executive session for more discussion.  One of the proposed expense cuts is to close our façade program fund that is rarely used.  I have no issues with stopping the program and using the $350 thousand in unused funds.  However, this is not an expense cut.  This is shifting money around.  I want to see real cuts. Additionally, the Village Manager was clear that there would be no new special events.  The only new special events are the three concerts which should be budget positive since we are charging for tickets. The focus should not be on budget neutral/positive events.  It should be on our structural costs! Lastly, one of the Village Manager’s proposed expense cuts was to cut our Veterans Programs.  His rationale was that it saved about $7K and the State of Illinois, VFW and American Legion provides these programs and we donate to these groups. This rationale is flawed as none of the groups he mentioned offer the programs we do.  Our Veteran’s programs include Memorial Day, Veteran’s Day, the Liberty Fun Run, our Sunday program at the Taste of Orland, The Fishing Derby for Disabled Veterans, The Veterans Steak Fry, the Veteran’s Memorial engraving and the formerly named Mayor’s golf outing, which is now the Veterans Golf Classic.   The good news is, our board agreed with me and directed the Village Manager not to cut the Veterans Programs. The Village Manager then requested more direction from the board and wanted us to approve the cuts and revenues that were proposed.  I disagreed.  First, staff, at the Village Manager’s direction, gave us a binary choice.  Either choose these alternatives or we can’t make the budget work.  I reject this idea because the board needs to be given choices which means finding more cuts and revenues that do not involve taxes.  This way the board can prioritize and make choices.  The board agreed with me to request an additional $500,000 in cuts and revenue options other than taxes. For example, no sponsorship revenue was assumed.  Staff did a great job developing sponsorships this year and that should be the baseline for next year.  Staff should be held accountable to match this year’s performance.  The board agreed. My comments also addressed the fact that these are hard decisions so the discussions will be long.  They have been professional and amicable and I expect them to remain so.  We are not facing a recession, but a fundamental shift in the economy.  The decisions made by the Village board over the next two to three years are critical for Orland Park’s success over the next twenty years.  I promise to continue to work on solving our fiscal problems for the long term. ****************************************************************  There are several upcoming meetings and events: Monday, September 10th, 6PM – Budget Meetings on Capital expenditures Tuesday, September 11th, Veteran’s Golf Classic, 9:30 shotgun Start, 4PM Dinner – Tickets are still available for dinner Monday, September 17th, Board Meeting, 7PM Saturday, September 22nd, Harvest Hoe Down at Crescent Park – Tickets Available Wednesday, September 26th, Mayor Pekau Fundraiser at Crystal Tree, Tickets Available at https://secure.anedot.com/keith-4-mayor/c6d653be00fe279bb93c8