Chief Financial Officer: Homewood’s financial outlook is encouraging; public hearing on the budget set for April 26

Homewood’s economy has weathered the COVID-19 pandemic better than expected so far, and that’s one of the factors contributing to a rather optimistic fiscal outlook for the year ahead.

At the village board meeting on Tuesday, April 12, CFO Dennis Bubenik walked the directors through the plan for fiscal year 2022-23highlighting overall stability with modest revenue increases that will allow the village to advance several projects requested by residents.

“There will always be a greater demand for local government services than we have the revenue to pay for those services, but through budget discussions we will balance the services we can provide with the revenue we have to pay for those services” , Bubenik said.

There is $153,600 in the capital budget for the 183rd Street improvements. The Department of Public Works unveiled a plan on March 22 for its next steps to make the street safer. A major project is the installation of traffic lights at 183rd and Center Avenue. Engineering work is expected to start soon.

In a related effort, the budget will support the police department’s increased efforts to control speed on 183rd Street and other major streets in the Village.

The capital budget also includes money for three TIF district projects, parking improvements in the Southgate shopping area, renovations to a building the village is in the process of acquiring at 1221 175th St. and infrastructure works in the Dixie Highway/Miller Court. district, which will house the Homewood Brewing Company.

The Village Manager’s office will add a planner position which was cut in 2010 following the Great Recession.

Overview of the proposed expenditure budget (Chart provided)

The budget also includes improvements to two key reserves, Bubenik said.

Approximately $76,000 will be added to the fund balance. The village has a policy of having enough savings to operate for four months if necessary. Bubenik pointed out how important this balance has been during recent economic downturns, including the recession that began in 2009 and in the early months of the COVID-19 pandemic in 2020.

“The fund balance is used to stabilize the services we can provide when the economy slows, such as during a recession,” he said. “Our revenue will decline and we will use our fund balance to maintain consistent service levels.”

The other reserve is a contingency fund that Bubenik said the Finance Department has been trying to establish for two decades, setting aside $10,000 to $50,000 when it can.

“It just wasn’t enough,” he said. “This year, we have 1% of our budget, or about $230,000. This is an example of good financial management by local governments.

The contingency fund will be used in case of emergency, those situations where the village faces expenses that could not be anticipated during the budget process.

To ensure that the fund is used properly, the finance department submitted a draft policy to the board of directors to define the circumstances that would be considered emergencies. Bubenik said contingency funds are typically used for things like major equipment failures or unforeseen legal fees.

What makes the provident fund and other initiatives possible is the healthy sales tax revenue forecast. Bubenik said the sales tax has also proven resilient to the worst of the pandemic.

“Sales tax has done surprisingly well during the COVID-19 pandemic. It’s thanks to our vendor mix,” he said. “For example, home improvement stores and grocery stores were very busy.”

Sales tax represents the largest portion of Homewood’s revenue. The budget calls for an 8% increase, which will bring in about $5.7 million. The second largest source of revenue, property taxes, is expected to hold steady at just over $2.2 million.

Bubenik said about two-thirds of the village’s property tax revenue is spent on pension obligations.

The village is also receiving federal pandemic funding this year through the American Rescue Plan Act. About $1.2 million was received in October 2021, and another $1.2 million is expected in October 2022. That money will be set aside for projects, Bubenik said.

Overview of the proposed expenditure budget (Chart provided)

Other revenue streams are expected to improve over the coming year.

The Motor Fuel Tax Fund, which pays for street maintenance and improvements, got a boost from the state’s Rebuild Illinois infrastructure program, though Bubenik said the increase could be offset by increasing costs.

The Local Government Distributive Fund, a program that sends a portion of state sales tax revenue to municipalities, will see an increase for the first time in years. The percentage that municipalities receive was reduced in 2011 from 10% to 6%. It has fluctuated a bit since then. This year, the legislator approved an increase from 6.06% to 6.16%.

Mayor Richard Hofeld said the village should receive an additional $150,000 from the increase. He commended the staff for the budget plan.

“It’s a well-thought-out budget,” he said. “I want to thank each of the department heads. You live within your means and do everything very well.”

the draft budget is available on the village website. A public hearing on the budget will be held on April 26 at 7 p.m. in the council chambers of the village hall, 2020 Chestnut Road.