Updated Year-Over-Year Revenue Tracking

I’ve re-visited previously published revenue tables in an ongoing effort to monitor DeKalb’s financial recovery. Are we yet on solid financial ground? Make the jump to see what you think. (FYI this is a long one, folks.)

Sales and Use Taxes
This category of city revenues currently makes up about 41% of the annual General Fund (GF) budget.

Despite hikes in the Home Rule and Restaurant & Bar sales taxes in response to the 2008 market crashes, revenues fell embarrassingly short of projections for several years. The City of DeKalb was simply not prepared for the depth of the recession and lack of solid growth afterward.

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FY2011 saw a recovery of sorts — if by recovery it’s OK to mean taxable sales climbed back up to 2009 levels and revenues were helped along by the tax hikes, inflation and the business cycle.

Nevertheless, FY2013 is forecast to see sales and use taxes come in at $1,887,130 more than in FY2006, the last year that was generally “unadulterated” by recessionary processes.

Income Taxes from the State of Illinois
Municipalities get a cut of the state income tax revenues — at least for now. DeKalb’s share makes up 12% of its GF revenues.

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Revenues in this category remain flat as can be. The FY2013 projection is only $323,005 over the FY2006 number.

Utility Tax Revenues and a Word about Water
Utility tax revenues also make up 12% of GF revenues. It has required two tax hikes since 2008 to keep it that way, as they otherwise stubbornly continue to fall. Projected FY2013 utility tax revenues are down $95,762 from FY2006 numbers.

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Drops in utility tax takes and water demand might indicate strides forward in energy conservation or friendly weather, but they can also signal migration from the community. I have included Water Division numbers at the end of this report (“Bonus Table,” treated separately since the Water Fund is not part of the GF) because it is my contention that DeKalb did not stop losing population when the 2010 U.S. Census was completed and this is evidence of it.

Growth in Expenditures
The above three important revenues support about 65% of the General Fund budget. Altogether, there’s a gain of $2.1 million forecast for FY2013 over FY2006. It’s very slow growth, but growth nonetheless.

Total GF budget revenues similarly show an increase, approaching $4 million for FY2013 over FY2006.

The problem is, the growth in expenditures for the Police and Fire Department budgets just by themselves for the same time period is also about $4 million.

[easychart type=”line” width=”420″ title=”Police and Fire Costs in Millions” groupnames=”Police Dept, Fire Dept” valuenames=”2006, 2007, 2008, 2009, 2010, 2011, 2012″ group1values=”7.5, 7.9, 8.4, 8.8, 9.3, 9.4, 10.1″ group2values=”7.5, 7.8, 8.2, 8.6, 8.7, 8.7, 9.3″ minaxis=”7.4″]

(The bit of flattening during FY2009-2011 was primarily due to the hiring freeze/attrition, with additional flattening of the FD’s budget due to its miracle cuts in overtime.)

When two departments out of a whole city government eat up all the new revenues, you have what is called a structural problem. Getting rid of 34 employees in FY2011 reduced costs in the short term, but did not correct the cause.

Present and Future
City of DeKalb budgets from FY2011 on look good superficially. This is because of a combination of the drastic number of employee separations, refinancing, and a few well-timed windfalls in the appearance of the TIF surpluses and more grant monies than usual.

However, real growth in core revenues is still extremely sluggish, as we saw with the examples in the tables above. Revenues in 8 of 10 categories actually are expected to drop for FY2013.

Against this backdrop, DeKalb has begun hiring again.

Is this crazy? I think it is, and time will tell.

Bonus Table: Water Sales & Demand

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Sources: Annual budgets* from the City of DeKalb Downloads page and Water Quality Reports from DeKalb’s Water Division.

*Where actual data was available, I used it. Budgeted figures were typically taken from the original adopted budgets and may vary from outcomes since budgets are subject to amendment throughout the fiscal year. FY2012 figures are, of course, estimates at this point. Most FY2013 projections were taken from the FY2013 draft budget and may vary somewhat from the adopted budget that is online now.

Speaking of projections, I observe that those from the past couple years are very much more in line with reality than the ones from FY2008-10. This is especially true of recent/current revenue projections, which typically seem appropriately conservative to me. I feel reasonably comfortable using the FY2013 projections and am inclined to credit the finance director, Laura Pisarcik, for this.