Anatomy of DeKalb’s proposals for a sales tax hike

That’s not a typo in the headline. There are, I believe, two proposals for a sales tax hike of one cent for fiscal 2018. One comes from DeKalb city administrators, the other from the city’s finance advisory committee (FAC).

Here’s the proposal staff put into the draft budget:

proposed increase of sales tax

Sales tax for hiring police officers? Sales tax for “operations stabilization?” These people have run out of money for day-to-day expenses. The hiring spree chickens have come home to roost. Continue reading Anatomy of DeKalb’s proposals for a sales tax hike

DeKalb, I’ve got your new police officers right here

DeKalb staff are proposing a one-cent rise in the local sales tax in order to meet next fiscal year’s budget beginning January 1, 2018.

They’ll tell you this is about street improvements, but they didn’t care about that last year or the year before, so I believe anything promised for streets is a sweetener to make the proposal more politically palatable.

What’s really going on is that the city has run out of money for streets AND operations now. They’d like to hire three new patrol officers, but they can’t do it because of the structural budget issue, meaning they’ve hired employees beyond what the growth in revenues can accommodate.

So they want $600,000 of the new sales tax to go into the General Fund. That’s how much they’re short for their current ambitions. But what the city council really should do is tell city manager Anne Marie Gaura to cut some people from the departments that come under the umbrella of administrative services. That’s where the most growth in personnel has happened on Gaura’s watch.


Continue reading DeKalb, I’ve got your new police officers right here

DeKalb may raise taxes, but the structural budget issue remains

DeKalb’s Financial Advisory Committee (FAC) will be recommending that the city council raise the property tax levy by $954,000, and its local (home rule) sales tax by one cent, in the fiscal year starting January 2018.

The property tax recommendation was approved by the FAC in early October, and the sales tax during a meeting November 2.*

Even if the city council passes the recommended increases, FAC members acknowledge it would not fix the basic operations budget problem. The hikes, if approved, would balance the General Fund budget for this year, and maybe next. But without a major intervention to eliminate the structural issue, they would not constitute a long-term solution.

Indeed, the city’s own five-year forecast has the General Fund in deficit of nearly $2.9 million by 2022 — and that forecast is now due for an update because of DeKalb’s recent purchase of the condemned Edgebrook property and the latest downwardly-revised projections for state income tax revenues. On this trajectory, we could be looking at a hole of $3.5 million or more in operating revenues. And the forecast doesn’t cover grimmer scenarios, such as what happens to income tax revenues (distributed on a per capita basis) if DeKalb’s population has shrunk to fewer than the currently-claimed 40,030 residents, or how we’ll end up if recession hits in the next couple years. Continue reading DeKalb may raise taxes, but the structural budget issue remains

City of DeKalb’s share of county property taxes, not including the latest wish list

If you haven’t heard, the DeKalb is setting a property tax “ceiling” during its regular meeting tonight.

This is a legal-beagle advance notification of the highest aggregate amount that DeKalb could possibly ask for when the council sets the levy during its first meeting in December.

What a piece of luck, because recently I’ve been looking at past property tax share portions in DeKalb County. Below you can see tax year 2016, which we just got done paying for in September:

chart of property tax shares in dekalb county

The proportions have remained very stable for the past decade. District 428 mostly ranges within a point either way of its current share, and hasn’t risen above 63%. Kish College has gone as high as 7% and is now on the low end of its usual range. The one exception is City of DeKalb.

In the chart below, what I’ve done is to compare City of DeKalb, its component unit DeKalb Public Library, and DeKalb County. For six years (and maybe more), the property tax shares of City of DeKalb and its library equalled the share of DeKalb County government at 10%, but over the past three years the county has done a better job holding the line on tax increases, while the city has pushed rapid growth in its levies.

Next year, what with the city’s new director of finance talking about a 9.5% share, the city will likely solidify its new status as second-highest consumer of property taxes in the county, even before counting the library.

TIF spending for streets in FY16 did not come anywhere near what DeKalb is claiming

The setup: During the special Committee of the Whole meeting of Monday evening, DeKalb council members were discussing with staff a proposed budget reduction in 2018 for the street improvement program in our two TIF districts, specifically a staff recommendation to cut in half the usual $1 million budgeted for streets in the TIFs. During the course of this discussion, Alderman David Jacobson asked whether the money budgeted in the TIFs for previous years actually got spent. Here’s the actual transcripted exchange:

Jacobson: One other question, only because it was something that was brought up this afternoon to me. I know there was a question last year about– I think it was in the 16-and-a-half budget, if I’m correct, that the council asked for a million-dollar budget in the TIFs for road expenditures, and there was some question as to whether or not that was ever spent?

Public Works Director Tim Holdeman: Absolutely, that was spent. That was in our road program for this year; we have completed that street maintenance, both in TIF 1 and TIF 2 districts. I don’t have the final numbers, but it’s very close to a million dollars. It bid out at about $990,000. So with the engineering, we were right at– we were a little bit above a million, but we could supplement that with Fund 50, so…[crosstalk]

Jacobson: And was that the same in ’16 as well?

Holdeman: For ’16?

Jacobson: The full million for ’16?

Holdeman: Yes, that was the same for fiscal year ’16, yes.

Holdeman’s comments make it sound like the city spent $1 million out of the TIF funds in FY16, another $1 million in FY17, and maybe something in between, during that six-month budget period they call FY16.5. But these claims are not demonstrably true at this point. The FY16 audited numbers are available, and as I reported earlier this year,* the TIF reports filed with the Illinois Comptroller show that not quite $115,000 was spent in the TIF districts on street improvements during FY16 — nowhere near the budgeted $1 million. Continue reading TIF spending for streets in FY16 did not come anywhere near what DeKalb is claiming

DeKalb’s HR budget is out of control, and now they want to make it even worse

DeKalb’s Human Resources budget growth by fiscal year (rounded):

2014: $164,000 (actual)

2015: $184,000 (actual)

2016: $254,000 (actual)

2017: $456,000 (projected)

In FY14, there was one full-time director and one part-timer in HR.

Before that, there were some difficult years where HR had only one director, and the assistant city manager helped fill the gaps (along with having budget officer duties).

For FY17, we now have two expensive administrators (HR director and assistant director), a part-time administrative assistant, and a part-time HR generalist.

City staff would like to make the generalist’s position full-time for the next fiscal year, which would double the personnel from FY14 and effectively triple the budget during the same time period.

Even during DeKalb’s population boomlet and NIU’s peak enrollment (ca. 2007), when DeKalb was hiring rapidly to keep up with growth, HR never required more than two full-timers — and that was before all the compulsive software shopping, too.

So when do we see increases in productivity? When does council end the destructive hiring spree?

Until it does, we can’t have nice streets.

Why did DeKalb change its employee numbers going back 10 years?

I was looking up city budgets yesterday and thought that information on numbers of employees would help provide more context for what I was seeing.

My resource for this is the Comprehensive Annual Financial Report (CAFR), not the CAFR itself, but a report appended near the end of the document that’s called “Full-Time Equivalent Employees,” or as I call it, the FTE report.

The FTE report does not tell you how many people the city employed, but it does tell you how many FTEs it budgeted for in each city department during the fiscal year just closed, plus the FTEs budgeted each of nine additional years back.

Imagine my shock when I saw that the FTE report attached to the FY16 CAFR changed all the historical data. Continue reading Why did DeKalb change its employee numbers going back 10 years?

Pie is for Bureaucrats, Not Streets People

A friend of mine asked a couple weeks ago whether there is some way to calculate how much growth there’s been of bureaucrats in city government. Like many locals, I know that the DeKalb city manager has been generally allowed to spin off new departments and hire new administrators without restraint, but we’re somewhat lacking in numbers.

The main question: Just how top-heavy has the city become?

My approach was to look at departments funded by the General Fund — and divisions of these departments, where applicable — with a view toward defining what makes each particular department/division primarily about administration, versus frontline public safety, versus none of the above.

The details of the methodology are placed at the end of this post.

Going back far enough that I could fully appreciate what Mayor Rey and Manager Gaura have wrought, I found that expenses in the General Fund (GF) have grown by $6 million since FY2013.* Roughly $4 million of it has gone to the public safety category of police and fire personnel ($2.65 and $1.33 million, respectively) and $2 million towards administrative functions in GF departments.

To break it down further, of the $2 million for admin, a bit more than $300,000 has gone into the administrative divisions of police and fire, and the rest of it to the city manager’s office and the creation/expansion of the HR, IT, and Community Development departments.

They’re getting more in terms of GF dollars, but so is almost everybody. Are the admins actually getting a larger slice of the pie than they used to? Yes. The administrative piece from FY2011 through FY2014 averaged 21.5% of the admin-public safety total, but now its share exceeds 26%.

Public Works gets no pie, particularly not its Streets Division, which has had virtually the same budget since the personnel reduction and organization of FY2011.
Continue reading Pie is for Bureaucrats, Not Streets People

Pension Plan Membership as a Factor in Jump of Net Pension Liability

DeKalb’s latest Comprehensive Annual Financial Report (CAFR) is out. It covers Fiscal Year 2016, which ended June 30, 2016. The big news is the net pension liability.

Public safety expenses related to the operations of both the Police Department and Fire Department accounted for the largest share of expenses at $33,400,660 or 50.1% of the total. This represents a 50.1% increase from the FY15 total of $22,259,920. This increase was due primarily to the increase in the net pension liability for police and fire pension plans.

Yes, the city’s net financial position was reduced in one year by $12.4 million, and an increase in long-term liabilities accounts for about three quarters of the loss.

We can attribute a combination of factors in the increase in liabilities, not the least of which were investment returns coming in well under the actuarial assumption of 7.5%. However, today I’d like to focus on the growth of membership in the public safety pension plans, because it’s shocking to see them escalate like this while DeKalb itself is shrinking.

[easychart type=”vertbar” width=”420″ title=”Public Safety Pension Funds Membership” groupnames=”PD Members, FF Members” valuenames=”04, 05, 06, 07, 08, 09, 10, 11, 12, 13, 14, 15, 16″ group1values=”91, 93, 94, 97, 101, 100, 98, 99, 101, 107, 108, 111, 115″ group2values=”92, 97, 98, 105, 105, 105, 104, 102, 106, 107, 113, 116, 116″ minaxis=”90″] Continue reading Pension Plan Membership as a Factor in Jump of Net Pension Liability

Cindy and Ed Must Be Part of Voters’ Conversations about County Tax Referendum

***Note: This was originally published in June 2016. I am posting an updated version today, since the referendum ended up on the April 4, 2017 ballot instead of last November’s.***

The DeKalb County Health Department is trying to persuade our county board to place a referendum on the November election ballot to begin levying a property tax specifically for health services.

If this referendum does appear on the ballot, the most pressing questions for voters must include evaluation of needs, and of DeKalb County’s stewardship of our money.

Turns out, I have an example related to the latter for you to consider. Let me introduce you to Cindy and Ed. Continue reading Cindy and Ed Must Be Part of Voters’ Conversations about County Tax Referendum