HomeMy WebLinkAboutMinutes 19881
Draft Not Aparoved
Minutes
Budget Policy Committee Meeting
of April 11, 1988
Members Present: Aldermen Collens, Juliar, Korshak, Larson, and
Nelson
Members Absent: Alderman Morton
Staff Present: Keith Bennett, Assistant to the City Manager; Bruce
Zimmerman, Assistant City Manager
Others Present: Ira Golan, Chamber of Commerce; Sheila Richard,
News/Voice
Presiding Official: Alderman Nelson, Chair
Summary of Action:
The meeting was called to order at 7:50 P.M.
Minutes:
The minutes of the November 17, 1987 meeting were approved as submitted.
Chairman's Comments:
Chairman Nelson opened the meeting by stating that the reason for having a
meeting at this time is that the Committee is now up to six members, and
that a new fiscal year has begun, and therefore the Committee needed to set
an agenda for the coming year.
Matters Referred to the Committee:
Chairman Nelson indicated that Reference (D) (concerning incorporation of
Housing and Community Development Act Committee budget recommendations into
the City Manager's Proposed Budget) and (E) (concerning the appropriate
mechanism by which local taxing bodies can communicate with respect to their
levy and associated budgetary processes), neither of which were attributed
on the agenda, came from Aldermen Raden and Rainey respectively. He stated
further that he felt that the Committee should solicit the comments of these
Aldermen before proceeding.
Regarding Reference (E), Alderman Collens indicated that 9pproximately three
years ago, the City -School Liaison Committee agreed that such an effort was
needed, and as a result, some communications and presentations took place on
the respective budget processes. She added that while it was a noble
effort, no substantive progress was accomplished. Chairman Nelson commented
that some ten years ago, a similar effort was attempted and at that time,
the City was in effect told to mind its own business. Alderman Collens
stated that she felt the effort should be tried again, and that the
City -School Liaison Committee was the logical forum.
Alderman Korshak asked whether the school districts had buieet-ommittees.
Alderman Collens responded that the District #202 Board conEiders its budget
Minutes of the Budget Policy Committee Meeting
April 11, 1988....... Page Two
as a group, but District #65 has a committee. She added that District #65
has a larger citizens' task force that also participates with respect to
such items as budget format and calendar.
Chairman Nelson indicated that he thought Alderman Rainey intended a broad
scope of consideration. Alderman Collens stated her opinion that neither of
the three bodies would be receptive to being told by any of the others what
they should do, but they should attempt to gain some understanding of each
other's fiscal concerns and share plans, projections, and so on.
Chairman Nelson asked if there was any ongoing dialog between the three
bodies, and Alderman Collens responded in the negative.
Alderman Juliar stated that it would be worthwhile to try to determine the
impact of the total tax bill on the Evanston community, adding that most
people look to the City as the leader in taxes.
Alderman Larson stated that at the time of the recent school levy
referendum, the concern was that the size of the proposed increase might
have an impact on some residential choices. He noted some discussions he
had had with school officials, indicating that he was told that if it were
determined that the full increase were not needed, it could be partially
rescinded. He described a theoretical situation where property taxes were
increased and landlords kept pace by increasing rents, but then the tax
increase was rescinded but the landlords kept the resulting windfall.
Ira Golan commented that the Chamber of Commerce had attempted to analyze
the budget of District #202 (the larger of the two districts) in the same
manner as it analyzes the City budget. He stated that if the Chamber
attempted to do so again, it would need an outside consultant, as it lacks
the expertise to evaluate education. Mr. Golan also stated that any effort
between the taxing bodies needed to go beyond mere understanding.
Alderman Collens commented on the format of District U202's budget, stating
that it lacked narrative and descriptive material and looked more like the
City's Comprehensive Annual Financial Report.
Regarding Reference (A) (concerning the City's position on rate of taxes
compared with other North Shore municipalities), Alderman Collens commented
that it would be useful to go through the comparison that was done in 1985
(of Evanston, Skokie and Wilmette) as the Committee has under one changes in
membership since them. She suggested that when the Commil_te-? has a better
feel for the big picture, it can then sit down with the school districts.
Chairman Nelson suggested that perhaps the 1985 comparison could be
updated. He asked how it might be done to include public schools, and thus
examine the full, not merely the municipal, portion of the property tax
levy. Chairman Nelson further stated that the County portion of the levy
has increased more rapidly than any other component, exceeding the rate of
inflation.
Alderman Juliar talked about a co-worker of his who wante, to buy a home in
Evanston, but eventually chose Wilmette, citing taxes as a factor. Chairman
I 1'i'll' 11 � � �.�� �� �� � ■Ilianirii �I�� 'I!� '11t1 � � � n i ��t9��ll�l1'I�II��Ii�PiH111�"' m' ��II)����lPm� �P eii'���n � °q^�I�'l��,R��l�
Minutes of the Budget Policy Committee Meeting
April 11, 1988....... Page Three
Nelson noted a correlation between taxes and economic development, with a
point of diminishing returns. The Committee adopted a motion to have staff
prepare an outline of what such a tax comparison would be. The question was
raised as to whether the comparison should be limited to property taxes.
Mr. Golan indicated that if the comparison were limited to property taxes,
the results would be skewed, as Wilmette makes greater use of user fees, and
Skokie receives greater sales tax revenue because of the presence of the Old
Orchard Shopping Center.
Staff was directed to get a copy of the 1985 comparison to all Committee
members. With respect to the proposed update, Alderman Larson asked if it
were feasible to construct a computer model that the Committee could look
at. Bruce Zimmerman responded that staff probably has that capability.
Alderman Larson asked how easily this could be done and what the
difficulties might be. Mr. Zimmerman indicated that the data for the
various municipalities could be expressed differently, and the existence of
various special districts serving these municipalities will impact on how
the data is expressed.
Alderman Collens suggested examining the impact on business properties
separate from the impact on residential properties. She stated that it was
her understanding that the residential real estate market is not being
depressed, that taxes may change who lives here but does not have an impact
on sales. Alderman Larson mentioned the availability of a number of tax
incentives for commercial development. Mr. Golan commented that the
Committee has to keep Council's budget policy in mind. and that adherence to
it means that the property tax will automatically be less than the increase
in the Consumer Price Index. Mr. Golan added that his information is that
there is a modest increase in the vacancy rate in residential rental
properties. Alderman Korshak indicated that the office building market is
less clear than that for residential rentals, with incentives such as six
months free rent being offered. Alderman Larson expressed some concern
about the degree to which up front costs of development are picked up by the
City, and suggested that the citizens be surveyed as to their perception of
who collects taxes.
Chairman Nelson directed staff to attempt to set up a cross -jurisdictional
comparison before the next meeting. Alderman Collens indicated that it
might be interesting, if possible to lay out several taxpayer scenarios,
incorporating such variables as family size, income, and housing value.
Alderman Korshak suggested that the issue of user fees be placed on a future
agenda.
Chairman Nelson stated that Evanston's Equalized Assessed Value as compared
to Skokie's indicates that we have less of a tax base. He added that one
would think that the presence of Northwestern University is a contributing
factor, but the percentage of tax exempt property is comparable between
Evanston and Skokie. Mr. Golan commented that the cost per capita of
municipal government is significantly less in Evanston than in Skokie.
Chairman Nelson indicated that Evanston's sales tax revenue is twice what
Wilmette's is. the Committee adopted a motion to have the 1985 reprJrt
Minutes of the Budget Policy Committee Meeting
April 11, 1988....... Page Four
updated and expanded to include revenues, expenditures, and the respective
school districts.
Alderman Collens displayed a book of case studies produced by the National
League of Cities titled, Financing Infrastructure, and indicated that she
would continue to review it for ideas. Alderman Korshak requested that a
reference on user fees, originally sent to the Economic Development
Committee, be placed on this Committee's agenda. Alderman Larson expressed
a desire to have some discussion of the Real Estate Transfer Tax (such as
whether it is progressive or regressive) and to examine issues concerning
the Township budget (such as the impact of becoming a receiving township).
Chairman Nelson stated that the Real Estate Transfer Tax was discussed in
great detail when it was originally proposed and adopted, and suggested that
staff search for those memoranda and distribute them to the Committee. Mr.
Golan stated that one factor in attaining receiving township status is
providing a grant level that is below State level, and Evanston Township is
presently above State level. Alderman Korshak recalled that the discussion
of the Real Estate Transfer Tax was not so much its progressivity versus its
regressivity, but what the threshold of pain was.
Mr. Golan suggested that the City begin to consider alternative sources of
revenue. He also suggested that revenue reports be prepared on a more
frequent basis than quarterly, focusing on trends in such revenues as the
Utility Tax. Chairman Nelson indicated that this was touched on in Arthur
Young's report to management on the City's annual audit, which each member
should have a copy of. He suggested that more trend related analysis be
Incorporated into staff's quarterly reports. Alderman Collens indicated
that Council receives monthly reports on the Sales and Real Estate Transfer
Taxes. Chairman Nelson suggested that the existing reports be reformed,
restructured, and restyled.
Regarding Reference (C) (concerning holding meetings of the Committee of the
Whole for an interchange of ideas on tax policy), Alderman Collens stated
that Alderman Morton was suggesting a series of quarterly working sessions.
Regarding the suggestion of examining alternative sources of revenue,
Chairman Nelson indicated that the Committee may have to engage in a revenue
generation exericse in which any number of actual and potential revenues are
revisited, and also develop a procedure to cut expenditures.
Alderman Korshak suggested that the Committee ask Alderman Morton for
written explanations of References (A), (B) (concerning the possibility of
Council hiring an outside expert on tax policy), and (C). Chairman Nelson
indicated that in the absence of Alderman Horton, the Committee may have to
defer action on these references.
Staff was directed to take the following back to the City Manager for his
input: (a) the feasibility of examining existing revenue/expenditure
reports; and (b) whether the Manager would be amendable to reviewing thesa
reports quarterly at meetings of the Committee of the Whole.
Minutes of the Budget Policy Committee Hooting
April 11, 1988....... Page Five
The Committee recommended that revenues and expenditures be reviewed at a
series of Saturday meetings. Staff was directed to provide the Committee
with a set of dates, which the Committee would take to the full Council.
Alderman Larson commented on a link between References (g) and (A).
Regarding Reference (D). Chairman Nelson indicated that it was his
understanding that Alderman Raden is distressed at the variance between the
City Manager's recommendations and the Community Development Committee's
recommendations. Alderman Korshak stated that the Manager's budget
presentation is so imposing that members of the Community Development
Committee feel that there is a tendency to accept the Manager's
recommendations rather than its recommendations. He suggested that in the
future, the Manager point out any such variance to Council and explain the
rationale for it. Alderman Korshak further stated that he was unable to
support Reference (D). The Committee adopted a motion to incorporate
Alderman Korshak's suggestion, but otherwise leave the procedure intact.
It was requested that staff discuss the recommendations in the Arthur Young
report at a future meeting, and that all members of the Committee receive a
copy before that meeting. The Committee set Wednesday. May 11, 1988, as the
date of the next meeting. The Committee indicated a desire to discuss a
tentative format and completion timetable for the comparison of Evanston
with nearby municipalities. Alderman Collens also requested that the
investment report be placed on the agenda for consideration of whether to
improve or reject it, indicating that she felt it served little use in its
present form.
There being no further business, the meeting was adjourned at 9:29 P.H.
Minutes to be approved at the next meeting of the Budget Policy Committee.
Respectfully submitted,
' r�CIL
Keith Bennett
Assistant to the City Manager
Draft - Not Approved
Minutes
Budget Policy Committee Meeting
of June 28, 1988
Members Present: Aldermen Collens, Juliar, Korshak and Larson
Members Absent: Aldermen Morton and Nelson
Staff Present: Joel Asprooth, City Manager; Keith Bennett, Assistant
to the City Manager; Bruce Zimmerman, Assistant City
Manager; Robert Shonk, Finance Director
Others Present: Alderman Rudy; Ira Golan, Chamber of Commerce
Presiding Official: Alderman Collens, Acting Chair
Summary of Action:
The meeting was called to order at 7:54 P.H.
Minutes:
The minutes of the April 11, 1988 meeting were approved with corrections as
follows:
Page 1, last full paragraph: The second sentence was removed.
Page 2, second full paragraph (consisting of one sentence): This
sentence was amended to read, "Chairman Nelson asked if there was any
ongoing dialog about budgets between the three bodies...".
Page 3, second full paragraph: The second sentence was amended to read,
"...that tares may change who lives here but does not have an impact on
overall sales."
Tax Policy Discussion (Alderman Morton's References from Previous Meeting's
Agenda)
Due to Alderman Morton's absence, this agenda item was held.
"Evanston's Property Tax Comparisons with Other Communities" (1985 Report)
Alderman Collens pointed out that since the Committee last met, it had
received copies of the 1985 report and a copy of the Taxpayers' Federation
of Illinois report, Illinois Municipal Revenue & Spending Profile. She
added that the Committee needed to decide what its next step is and whether
this issue needs to be explored further.
Alderman Juliar commented that he feels more comfortable having this type of
information, and hopes to continue receiving it on a regular basis.
Alderman Larson commented on the increasing popularity of real estate
transfer taxes, noting that at least 12 communities in the Taxpayers'
Federation study levy it. He also made reference to a Ch':ago Tribune
article on the subject.
Minutes of the Budget Policy Committee Meeting
June 28, 1988....... Page Two
Alderman Korshak asked if some analysis of the import of the figures in the
1985 report is needed, pointing out, for example, some disparity in debt
service comparisons. Mr. Asprooth explained those disparities by pointing
out that Skokie, Wilmette, and other communities were newer, had less of an
infrastructure burden, were less likely to borrow and more likely to have
large cash outlays. Alderman Larson asked if the water system is partially
the reason for the debt service disparity, and Mr. Asprooth indicated that
the comparison dealt only with general obligation debt, not revenue debt.
Alderman Collens indicated that she shared Alderman Juliar's reaction that
the information is good to have. She suggested that the information on the
communities most relevant to Evanston be extracted from the Taxpayers'
Federation study and copies of that material be distributed to the full City
Council. Staff was directed to redistribute the 1985 study and the
aforementioned pages from the Taxpayers' Federation report to the full
Council, with a cover letter from the Committee.
Mr. Asprooth expressed concerns about updating the 1985 study to include
school districts (discussed in the previous Committee meeting). Alderman
Collens suggested that that part of the discussion became moot with the
distribution of the Taxpayers' Federation data (which includes school
district information).
Ira Golan inquired as to how the Committee saw itself using the
Information. Alderman Collens responded that that was a decision the
Committee had not quite made. Alderman Juliar indicated that he thought the
Taxpayers' Federation report should be distributed to all members of the
Council. Alderman Collens suggested indicating in the above mentioned cover
memo that if any member of the Council wished to have the full report, to
let Mr. Bennett know.
Alderman Larson asked why there would be such discrepancy in the Taxpayers'
Federation report in the miscellaneous revenues category. Mr. Shank
responded that it depends on how the data is aggregated and is a matter of
definition, which may vary from town to town. Alderman Korshak suggested
making a copy of the Taxpayers' Federation report available in the City
Clerk's Office, and mentioning to the Aldermen that it is there.
Discussion of Existing Revenue and Expenditure Reports
Alderman Larson indicated that he would find the reports on the Sales and
Real Estate Transfer taxes useful if they included as many prior years as
could fit on the page. Alderman Collens pointed out that the Sales Tax
report goes back three years, and the Real Estate Transfer Tai report goes
as far back as the tax does. She suggested adding year-to-date figures for
the prior years shown. Alderman Collens also noted that the Cigarette Tax
report goes back four years, and suggested that it continue in its present
form. Alderman Collens discussed the Liquor Tax report, indicating that it
is received infrequently. She asked why it is not issued more frequently
or, conversely, why it is issued at all. Mr. Asprooth responded that these
reports were sent when the Liquor Tax was a new tax, in order to give
Council a feel for receipts from that revenue source. He added that the
City has not made a consistent practice of issuing Liquor Tax reports.
Minutes of the Budget Policy Committee Meeting
June 28, 1988....... Page Three
Alderman Juliar mentioned that he does not find the Investment Report to be
particularly interesting. Mr. Shonk explained that the report dates from
the tenure of former City Manager Edward Martin, and was instituted at the
suggestion of then Alderman Gerson, a member of the Budget Policy
Committee. Alderman Juliar commented that the trends do not fluctuate as
widely as they did then. Mr. Asprooth stated that the objective at that
time was to demonstrate that the City was maximizing its return, and that
now attention is focused on the overall investment strategy. He added that
the City has a written investment strategy and can demonstrate to those
persons examining the City's books that the actual practice is in
conformance with that written policy. Mr. Shonk added that it is a good
internal control policy to make the information available to the Council and
to the public. Alderman Larson expressed interest in receiving a copy of
the investment strategy. Mr. Asprooth stated that the strategy has been
amended a few times as circumstances warrant, but that it embodies practices
outlined by the Government Finance Officers' Association and includes
quarterly meetings with the Finance Director and Assistant Finance
Director. Alderman Collens declared that if the Investment Report is to
have any internal control function, it certainly does not serve that purpose
for her, because it is not readily decipherable. Mr. Asprooth offered to
make a key to the report available to the Council.
Alderman Collens brought up the idea of having quarterly meetings of Council
at which the Quarterly Financial Statements would be reviewed. Mr. Asprooth
responded that he felt it would be a good idea, but that setting aside
Saturday mornings for this purpose would not be a good idea because of the
likelihood that the turnout would not be good. He offered an alternative
suggestion of putting the Quarterly Financial Statements on the regular
agenda on a quarterly basis. Alderman Juliar agreed that they should be on
the regular agenda. Alderman Larson cautioned that the scheduling should be
flexible. Mr. Asprooth asked if the next Quarterly Financial Statement
should be listed on the next agenda as coming from the Budget Policy
Committee prior to meeting again. The consensus of the Cor=nittee was to do
sa.
Mr. Golan asked if it would be useful to have reports on cash flow. Mr.
Asprooth responded that it is his intent to come back with such a report,
but to do so on the basis of three months may skew the picture. Alderman
Korshak asked how would Aldermen know where surpluses are developing that
might be used for other purposes, and whether it would be feasible to trans-
fer the surpluses to a special account and transfer there out when needed.
Mr. Asprooth stated that the quarterly report does give some indication of
where those surpluses are. He added that if major overages should occur in
a given department, steps would have to be taken to curtail those expenses,
and if those expenses were unavoidable (citing snow removal as an example),
the General Contingency account would have to be tapped. He pointed out
that the General Contingency account exists to meet unanticipated needs.
The Committee also requested that staff draft a written request to Alderman
Morton for written explanation and clarification of the references she
submitted that are being held on the agenda. It was asked when these
references were submitted, and staff indicated that it would check.
11OPI �Il I 111P III
Minutes of the Budget Policy Committee Meeting
June 28, 1988....... Page Four
Discussion of User Fees (Alderman Korshak's Reference to Economic
Development Committee)
Alderman Korshak stated that he became intrigued by user fees because of the
need to show restraint with regard to the property tax. He added that
before someone put forth any ideas, he thought it would be useful to develop
some criteria and parameters on user fees. Mr. Asprooth indicated that the
firm that prepared the article (an article in the February, 1988 issue of
the Illinois Municipal Review titled, "Scrutinize Local Options for
Additional Revenue", by David M. Griffith and Associates of Northbrook)
specializes in determining the true costs of municipal services, and that
the usefulness of such information is to be able to demonstrate these costs
to the users. He listed some examples of existing services for which fees
are charged, indicating that some likely bring in more than their true cost,
while others likely bring in less. In the latter instances, it is possible
to come up with a cost based rationale to increase these fees, but the
market for those services is another consideration. Alderman Korshak noted
that user fees present a way to generate revenues from tax exempt
properties, citing some examples where municipalities levy charges for
police and fire services. Mr. Asprooth stated that a study by someone
outside of City government who could conduct the study and testify to the
veracity of the data may be helpful. He cautioned that the data may show
that the fees in particular instances may be far below the costs, but to
raise them to a level at which they cover costs raises political and market
implications. Mr. Asprooth further added that the use of City staff time in
collecting and preparing information and assisting the study team would mean
a project of approximately half a year, and that the end product may not be
useful for another year beyond that. He suggested that the Committee needed
to examine carefully how far down that path it wanted to proceed. Alderman
Korshak suggested working with a limited number of departments and programs,
and choosing two or three operations to start with. Alderman Larson noted
that in some towns that have subscription fire service, the fire departments
have allowed the properties or residents who did not subscribe to burn down,
and added that police protection probably meets the test of being a pure
public good. Alderman Collens suggested that for the next meeting, staff
prepare a list of fees charged and the basis for them. Mr. Asprooth
indicated that he would prefer to make that available later in the year,
during the budget process. Mr. Golan suggested that before the Committee
proceeds, it needs to engage in some "what if" thinking. Alderman Collens
asked Kr. Asprooth to suggest a few areas for the Committee to focus in on
for the next agenda.
Planning Process for 1989-90 Budget
Alderman Collens suggested that consideration be given to the following
sequence of events: the staff presenting budget projections to the
Committee at a meeting in mid -summer as per normal practice; gathering
together the full Council at a special meeting to examine these projections
carefully, and devising a means to give the City Manager some direction as
to Council's priorities. Mr. Asprooth asked if it was the Committee's
intent that the Council begin considering such items as revenue and
expenditure options. Alderman Collens indicated that she is not
particularly willing to resurrect the options process, and that she felt
that consideration of the projections needed to be after the next Committee
Minutes of the Budget Policy Committee Meeting
June 28, 1988....... Page Five
meeting. Mr. Asprooth pointed out that one thing affecting the projections
is the and of the legislative session in Springfield. He added that
normally the projections are brought to the Committee in July, and suggested
that the meeting With the full Council take place after that.
Mr. Asprooth was asked about a memorandum Alderman Korshak had circulated
concerning the effect of the Consumer Price index on the City's budget
policy, but none of the staff had seen it. Alderman Collens requested that
a response in the form of a memorandum be prepared to the points raised in
the Arthur Young audit report, and Mr. Shonk said that one would be prepared.
Other Business
The Committee set Tuesday, July 26, 1988 as the date of its next meeting.
With no further business to come before the Committee, the meeting was
adjourned at 9:45 P.M.
The minutes are to be approved at the next meeting of the Budget Policy
Committee.
Respectfully submitted,
d- Ae
Keith Bennett
Draft - Not Approved
Minutes
Budget Policy Committee Meeting
of July 26, 1988
Members Present: Aldermen Collens, Juliar, Korshak, Larson, Morton
and Nelson
Members Absent: None
Staff Present: Joel Asprooth, City Manager; Keith Bennett,
Assistant to the City Manager; Robert Shank,
Finance Director; Bruce Zimmerman, Assistant City
Manager
Others Present: Ira Golan, Chamber of Commerce; Sheila Richard,
News/Voice; Jerrold Wolf and Daniel Denys, David
M.Griffith and Associates, Ltd.
Presiding Official: Alderman Nelson, Chair
Summary of Action:
The meeting was called to order at 7:55 P.H.
Minutes:
The minutes of the June 28, 1987 meeting were approved as submitted.
Tax Policy Discussion
Alderman Morton explained her references by stating that she felt that the
Council would function better in the budget process if it met to go over
pertinent material. She further indicated that it would be well advised for
the Council to take a position on adhering to or amending the Budget Policy,
and to consider whether it would need a consultant to advise it regarding
budget matters. She added that she is not necessarily wed to the idea of
having three meetings of the Committee of the Whole, but that she wanted to
ensure adequate discussion of tax policy matters. Alderan Morton further
indicated that she desired to avoid last minute budget cutting, and
preferred having some knowledgeable discussion and setting some guidelines
and parameters. Alderman Nelson commented that with regard to reference A,
there will be some discussion of the overall budget policy on the Council
floor. Discussion was thrown open to the Committee on references B and C to
determine the Committee's desires.
Alderman Collens commented that there was much discussion. of these issues at
prior meetings, and that because the Committee had received the Taxpayers'
Federation of Illinois report and copies of the 1985 staff report comparing
Evanston to Skokie and Wilmette, it decided that it did .not need additional
staff research. She added that the Committee also decided to put the
quarterly financial statements on the regular Council agenda, and noted that
it was on the agenda from the previous night's session, tut there was no
discussion. Alderman Collens concluded by stating that ::=e the budget
Minutes of the Budget Policy Committee Meeting
July 26, 1988....... Page Two
policy is affirmed, the entire Council will be engaged in discussion. In
response to a question by Alderman Morton on what the report findings
indicated, Alderman Collens indicated that the 1985 report displayed and
explained some differences but did not provide a specific guide for action.
Alderman Korshak commented that references B and C are outgrowths of
reference A. He indicated the issue was, if one owned a $150,000 home in
either of the three jurisdictions (Evanston, Skokie and Wilmette), what the
tax bills would be. Alderman Korshak indicated that the 1985 study showed
that Evanston had higher taxes, but the question then becomes one of why.
He stated that the problem is that the jurisdictions are not similar and
differ in the types of services provided. He gave as an example the fact
that Skokie's library does not operate branches while Evanston's does,
pointing out that there are certain overhead costs associated with operating
branches. He indicated that he sees the question, but is not sure what
additional information a consultant could provide that couldn't be provided
in house.
Alderman Nelson referred to a recent newspaper article that discussed the
varying property tax rates among Cook County municipalities, and indicated
that it mentioned that the school levy referendum passed. He noted that the
major portion of the property tax in Evanston goes to the school districts,
and the City's slice is merely keeping pace with inflation.
Alderman Larson asked if it were possible to consider questions such as what
the property tax could be reduced to if Northwestern University did not
exist or if Evanston's fee structure was similar to Wilmette's. Mr.
Asprooth indicated that the outcome of any such analysis would be that such
a reduction would be minimal at best. In the public safety area, for
instance, there would not be much of an impact on Police staffing, and the
Fire Department is already operating at minimum manning levels. Mr.
Asprooth indicated that such an analysis would necessarily be elaborate, and
that he hoped it wouldn't be undertaken because he has doubts about its
usefulness. Alderman Larson asked what Evanston's ratio of police to
population was in comparison to Wilmette and Skokie. Mr. Asprooth responded
that there were only a few communities in the state that have higher ratios
than Evanston. Alderman Juliar indicated that he agreed that Police and
Fire costs would not change much if Northwestern were not here. He added
that another aspect of fees is that they are interesting to look at, because
this would pose a choice to the community.
Alderman Korshak remarked that one type of analysis could be the proportion
of the budget (of the respective jurisdictions) allocated to certain service
areas, and that another type of analysis could be the cost of local
government per capita. Alderman Larson asked Mr. Golan what the results
would be if Evanston became competitive with Skokie and Wilmette on property
taxes. Mr. Golan responded that he could not answer the question because
the municipalities are not comparable. He commented further on the
newspaper article on property taxes, making a comparison between Evanston
and Harvey, a municipality with a somewhat comparable tax level. Kr. Golan
stated that the major difference between Evanston and Harvey is that the
citizenry in Evanston made voluntary choices to fund particular levels of
public services
��++i!���P�I�I�����Il��llh�i�l�����������l�l���ii�ll���l������I�����'r iii�l� � '�I�I� I'll" q+ '�119�iu+PA��� ��'Ilig91 � i++ +pill it p'+I+ �ipi � �Il��iii� ����I'+q� �� � � li II• �li,•�,
Minutes of the Budget Policy Committee Meeting
July 26, 1988....... Page Three
and education, whereas Harvey had to raise its property taxes simply to
provide basic services because it had little other economic means to do so.
Stating that reconstructing a comparison would be costly and is unlikely to
influence Council's decision, Alderman Larson moved to cease formal
discussion of comparative studies until such time as the Council decides
that such a comparison will be used to effect a decision. He added that he
felt the Committee was spinning its wheels. Mr. Asprooth commented that he
would like to know where the Committee is going with the idea of a
comparative study, because there is a significant cost in terms of other
staff projects deferred.
With regard to the reference from Alderman Rainey. Alderman Collens
commented that she thought that the Committee had disposed of the matter of
communication between the taxing bodies by deciding that it would be the
function of the City/School Liaison Committee. Alderman Morton noted that
because of when the meetings were scheduled, members of Council were unable
to attend school board meetings at which budget matters were discussed. Mr.
Asprooth pointed out that the schedule of City Council is at its own
discretion, and that it could simply decide to meet on another date.
Alderman Nelson directed a reference to the Rules Committee to consider
scheduling alternatives for City Council, and directed Alderman Rainey's
reference to the City/School Liaison Committee.
Continuation of User Fee Discussion
Mr. Asprooth explained that the discussion grew out of an article that
appeared in the February, 1988 issue of the Illinois Municipal Review,
titled "Scrutinize Local Options for Additional Revenue" by the firm of
David M. Griffith and Associates (DMG) of Northbrook, which was brought to
the Committee by Alderman Korshak. Mr. Asprooth introducQd two
representatives of DMG, Jerry Wolf and Daniel Denys, who made a presentation
to the Committee. Mr. Denys highlighted a study that DMG had done for the
City of Aurora, which is undergoing growth through new development and is
thus moving toward the use of development fees. He emphasized that the
important thing in any jurisdiction is to know specifically what the costs
of service are. Mr. Denys added that what DMG has done in every community
in which has worked is to develop a user fee cost flow chart, which shows
that numerous persons are involved in providing a particular service,
including people outside the department normally associated with that
service.
Alderman Collens asked how the firm deals with the concept of marginal
costs, and Mr. Denys responded that they typically look at broad based areas
because that it the way local governments are set up. Alderman Nelson asked
the representatives who DMG's competition is. Mr. Wolf responded that it is
generally their belief that they have no competition, but have been in a
competitive position with "big eight" accounting firms, however, the "big
eight" firms do not specialize in local government cost determination. He
added that many of their clients don't entertain competitive bids. Mr. Wolf
also explained that a number of municipal services are sibsidized, in many
cases unknowingly, and that the fees that are adopted are the ones that are
more businesslike in nature.
Minutes of the Budget Policy Committee Meeting
July 26, 1988....... Page Four
Noticing that DMG's list of clients included Skokie, Alderman Nelson asked
when they had performed a study there, and was informed that that was very
recently. Alderman Juliar stated that we must know the true costs of
providing services and to what degree those costs are being subsidized; the
question is how accurately we must know it. Once that is determined, he
added, thee is a market -based decision to be made. Mr. Asprooth pointed out
that the City has an idea of what its services cost, but not to the degree
laid out in DMG's material. He added that there is a great deal of interest
among City administrative staff in going through a cost determination
process. Mr. Asprooth further stated his concern that a number of similar
exercises have been engaged in over the years and his sense that there is a
point at which Council draws a line and the basic issues on which decisions
are made will not change.
Mr. Golan asked if DMG keeps track of how much of its work has actually been
used by its clients. Mr. Denys responded that in local governments in which
they have worked, they generally find a subsidy of approximately $3,000 per
citizen, and that those jurisdictions implement measures to recover between
$750 and $1,000 in fees. Alderman Collens asked about the interest on the
part of City administrators in a cost study, and Mr. Asprooth responded that
several administrators have indicated to him that existing fees charged do
not cover the cost of providing their respective services. A question was
asked about the cost of such a study. The DMG representatives responded
that the Skokie study, which was very limited in scope, cost about $12,000.
A full-blown study such as the one done in Aurora cost $35,000. Mr. Golan
stated that if the City has this type of information, it may do nothing with
it immediately, but in times of a fiscal crunch, it would become important.
Alderman Korshak indicated that it would be easier to implement user fees
where the user acknowledges the receipt of a benefit, but there are some
things that we are going to have to be willing to subsidize. He concluded
that it will come down to a matter of philosophy. Mr. Asprooth asked how
long the studies typically took, and Mr. Denys indicated that the timeframe
was three to six months. Alderman Nelson thanked Mr. Wolf and Mr. Denys for
their presentation, and indicated that he would keep the subject of user
fees on the agenda.
Investment Policv
Regarding Section VIII (Internal Controls), Alderman Korshak asked whether
the Finance Director or the Recreation Department Business Manager sets
internal controls for the Recreation Department. Mr. Shonk responded that
he, as Finance Director, is responsible for the overall City government and
noted that the Recreation Department Business Manager does not report to
him. Mr. Asprooth added that the Recreation Department has its own set of
internal controls, but that their operations are accounted for in the City's
financial control system. Alderman Korshak indicated that in Section VI
(Financial Institutions), where it reads,.... "The City seeks to promote
local economic development by investing public funds in time deposits
offered by local financial institutions who make commitments to local
economic growth and housing investment," he would like to see a qualifier
that there be a demonstrated commitment on the part of those financial
institutions. Alderman Nelson suggested that Alderman Korshak discuss
appropriate language with Mr. Asprooth and Mr. Shonk. Mr. Asprooth
indicated that the issue is
Minutes of the Budget Policy Committee Meeting
July 26, 1988....... Page Five
only marginally related to the investment policy. He added that he had no
problem discussing it, but would suggest deferring amendment of the
investment policy. Alderman Larson indicated that he may wish to strike the
requirements that the deposits be in Evanston financial institutions.
Alderman Juliar echoed that sentiment. Alderman Morton inquired as to the
genesis of the investment policy. Mr. Aspooth responded that it was
developed in house, in conformance with generally accepted principles. He
added that it did not require Council action, but if any direction came from
the Council, it would be incorporated. In response to Alderman Collens, Mr.
Shonk indicated that a key would be placed at the bottom of the investment
report.
Fiscal Year 1989-90 General Fund Budget Projection and Budget Policy
Mr. Asprooth summarized the budget projection, indicating that preliminary
information showed General Fund revenues increasing 2.2% to $40,194,834.
Expenditures, however, were projected to increase 5.4% to $41,476,253,
creating a budget shortfall of $1,281,419. Mr. Asprooth indicated that as
departments prepare their budget requests and as more definitive information
becomes available, this picture would no doubt become clearer. Alderman
Korshak indicated that while Mr. Asprooth implied in his memorandum to the
Committee that there is no use in preparing budget reduction options because
not much had come of them in the past, the membership of the Council has
changed since then. Alderman Morton declared that she could not see why
Council could not make up its mind to give the City Manager some direction
on the budget. She cited an example from the school district in which it
had to cut back on programs and staff, and indicated that she would prefer
to give that type of direction to the City Manager. alderman Morton moved
to limit the property tax levy to fiscal year 1988-89 levels. Alderman
Collens responded that it is impossible to ask Council to take a position of
no property tax increase without some cost-cutting measures. Alderman
Morton stated that Council has to get away from the notion of raising
taxes. Alderman Korshak indicated that he would defend the existing
Comsumer Price Index as the upper limit of a property tax increase, and
added that he did not know where we will find $1,000,000-plus in savings.
Alderman Larson indicated that the only fee that the City levies about which
he has heard complaints is the alarm fee. Alderman Juliar stated that he
will come up with a list of potential cuts and so would the other members of
Council, and while they may not agree, there will be some consensus.
Alderman Collens stated that there needed to be some thought on how to
structure the proposed September meeting so that some pr:;osals for cuts can
come about. She added that she feels some sort of option. exercise had to be
done. Mr. Asprooth disagreed with the latter point. The Committee adopted a
motion to cut off debate. Alderman Morton's motion was defeated, four votes
to two. Alderman Korshak moved to limit the property tax to 103.7% of the
fiscal year 1988-89 levy, while providing for no addition to cover the loss
of revenue sharing, Alderman Nelson stated that his constituents seem to be
willing to cover inflation, but not to pay more than the cost of inflation.
He added that it is fair to track inflation, and that the City has done its
fair share to hold down the property tax while other taxing bodies have
not. Alderman Morton indicated that she would not be voting for this motion,
0
u
Minutes of the Budget Policy Committee Meeting
July 26, 1988.....Page Six
adding that Council needs to make a statement to the community that it is
trying to cut back. Alderman Korshak's motion was approved, five votes to
one.
Memorandum from Alderman Korshak Concerning the Effect of Consumer Price
Index Increases on Budget Poliev
Alderman Korshak stated that he would like to reserve discussion on this
matter.
The Committee set Tuesday, August 23, 1988, as the date of its next
meeting. (NOTE: This has subsequently been changed to Tuesday, August 16.)
With no further business to come before the Committee, the meeting was
adjourned at 10:50 p.m.
Minutes to be approved at the next meeting of the Budget Policy Committee.
Respectfully submitted,
r
Keith Bennett, Staff
Draft - Not Avoroved
minutes
Budget Policy Committee meeting
of August lb, 1988
Members Present: Aldermen Collens, Juliar, Korshak, Larson, Horton
and Nelson
Members Absent: None
Staff Present: Joel Asprooth, City manager; Keith Sennett,
Assistant to the City manager; Robert Shank,
Finance Director; Bruce Zimmerman, Assistant City
Manager
Presiding official: Alderman Nelson, Chair
Summary of Action:
The meeting was called to order at 7:47 P.M.
Minutes:
the minutes of the July 26, 1988 meeting were approved with the following
correction:
Page 5: The first full sentence was amended to read:
"He added that he had no problem discussing it, but would
suggest deferring amendment of the investment policy because
Alderman Warshaw is working on related lexisl4tion."
Sevtember 19 Svecial Meeting on Budget Policy
Alderman Nelson suggested that the Committee discuss potential approaches,
as well as entertain suggestions from the City manager, regarding the
meeting. Mr. Asprooth suggested that three things take place: (1) going
through the revenue and expenditure projections and explaining the
assumptions behind them; (2) reviewing the projections that have been made
over the past few years, adjustments between the preliminary projections and
the proposed budget, and adjustments between the proposed budget and the
adopted budget; and (3) comparing what it would take to maintain current
levels of services with what it is possible to raise. Mr. Asprooth
indicated that he thought the process would be instructive and would show
mostly revenue adjustments and very few substantial expenditure adjustments,
most of the expenditure adjustments taking place between 1982 and 1985. He
suggested concentrating on non -property tax revenue adjustments, as most of
the ground on expenditure cuts has been covered. In response to questions
by Committee members, Mr. Asprooth indicated that there is not much room on
program reductions, but Council can review those suggestions that have been
offered and rejected in previous years.
Alderman Nelson asked if the City manager was suggesting that in addition to
the historical perspective and examination of non -property tax revenues,
Council not explore program cuts. Mr. Asprooth responded that he was
advising against concentrating on program cuts because such efforts have not
Minutes of the Budget Policy Committee Meeting
August 16, 1988....... Page Two
been fruitful in the past. He described the past eight years as a long
process of whittling.
Alderman Rorshak stated that the Council should consider how the community
at large will react to what it (Council) says and does. He cited as
examples some past proposals for consolidation of services, and indicated
that even there, the savings were, relatively speaking, merely pennies. He
added that during the time that he has been on Council, City Managers Martin
and Asprooth have made proposals that have been rejected, but it is not the
same council now. Mr. Asprooth indicated that one approach would be to
circulate the list of expenditure cuts that was presented the last time the
Council engaged in a budget option process (1985 or 1986) as well as the
poll results (the number of aldermen who were willing to support each cut).
Alderman 3uliar stated that one of the things that the Aldermen have all
heard from the community is the question, "Why not cut programs or
expenditures?" He indicated that he thought the Council should review the
old proposals for no other reason than to show the community that it is
considering program cuts, and added that it could stimulate some new
thinking. Alderman 3uliar also suggested not indicating what the past
results on the various proposals were, so as to avoid coloring this year's
consideration. Alderman Morton indicated that her view on tightening the
(fiscal) reins comes from the fact that she is more knowledgeable than she
was when she first came onto Council, and suggested that the same was true
of other members. She stated that she did not think it counterproductive or
see how it would not be responsive to reexamine old proposals. Alderman
Morton added that questions could be asked and answers obtained as to why a
particular course of action is not feasible.
Alderman Morton asked Mr. Shonk whether when the City makes investments,
there is a certain amount to be invested and whether it is wise to invest
only in certain types of investments. Mr. Shonk responded that the City
attempts to keep all cash not needed to meet the bills list and payroll
invested at all times, though the amount varies according to collections and
receipts. Mr. Asprooth added that General Fund cash on hand is typically
Invested short-term because it is presumed to have a more immediate need,
and that most of the investments shown on the Investment Report relate to
the pension funds, which are invested long-term, or capital funds. Alderman
Morton asked for an estimate of the percentage of the Recreation Department
budget that is tax supported. Mr. Asprooth indicated that tax support
accounts for approximately $2 million of a $3.3 million budget. Alderman
Morton suggested that that represented a large subsidy. Mr. Asprooth
agreed, but indicated that the subsidy was not to the degree or previous
years.
Alderman Collens suggested reviewing the old li"t of expenditure reduction
proposals and allowing any alderman to ask that any item be reconsidered.
Alderman Larson pointed out that expenditure reductions will mean a tax
savings, but it is generally assumed that the tax to be reduced is the
property tax. He suggested that in addition to suggesting a cut, indicating
also the revenue source to be reduced accordingly. Mr. Asprooth indicated
that limits on the property tax in large measure drive the search for other
Minutes of the Budget Policy Committee Meeting
August 16, 1988....... Page Three
sources of revenue. Alderman Larson also suggested setting a target figure
for expenditure reductions. He posed two questions for thought: How many
households would notice if it were possible to eliminate the tax subsidy for
Recreation programs, and whether a tax increase that is less than the rate
of inflation is a real increase or decrease.
Mr. Asprooth stated that there were no new ideas on non -property tax
revenues, but there are some ideas that are less odious than others. For
example, the City imposed the beverage portion of the food and beverage tax,
but still retains the authority to tax food. The City also has the
authority to levy a gasoline tax and an additional sales tax. Regarding
user fees, Mr. Asprooth said that he plans to get a quote from David M.
Griffith and Associates on a study of fees for inspectional services. Other
than that, Mr. Asprooth indicated that user fees are perceived as "nickel
and dime" (to the public).
Alderman Collens stated that they are no longer talking bout ways to cut
spending, but ways to balance the budget. Alderman Korshak stated that
Council has not done an effective job of communicating to the people the
reasons why it has taken those actions that have upset the people. He added
that neither School District #202 nor School District #65 has a budget
policy of any kind, but the City has one which acts as a restraint, and
people are now recognizing how much of the property tax bill is for
schools. Alderman Collens said that in all fairness to the school
districts, they would argue that the restraint they are under is a legal
restriction on their taxing authority without benefit of referendum, whereas
the City's restraint is voluntary. Alderman Nelson stated that Council's
efforts to communicate with the public have been poorly received, and
indicated that there are more cable television viewers than there are people
who vote. He hinted that the people have themselves to blame.
There was consensus that the Committee would like to have some communication
from the City Manager on non --property tax revenues that could or should be
considered. There was also consensus to consider expenditure reductions by
examining those proposals that have previously been considered. The
Committee would propose exactly how these prior proposals would be
reexamined.
Alderman Larson indicated that he would see the resurrection of the previous
proposals as useful information. Alderman Collens stated that the options
should be redistributed, but the previous numerical votes on them would not
be as useful. Alderman Morton stated that it is partially an educational
process, and added that a graphic presentation of what the problems are
would be useful. She also indicated that a listing of all the new
expenditures this year is needed. for. Asprooth referred her to the budget
postscript. Alderman Morton asked if every employee received a salary
increase, and was informed that they did. She stated that she needed to see
on paper how much these salary increases represent. Alderman Morton also
suggested that a wage freeze be considered, and added that Council should
set its priorities with regard to services.
Minutes of the Budget Policy Committee Meeting
August 16, 1988....... Page Four
Alderman 3uliar stated that it was important to review some of the
expenditure possibilities, but was not sure if an elaborate analysis was
necessary. Mr. Asprooth indicated that there is some value in summarizing
those options that have been accepted. Alderman Korshak stated that he
would like to see four years of information, with those options that
received the support of at least 40% of the Council highlighted. He would
also like to know how much was saved through the proposals that were
adopted. He would like to consider whether additional rp ies can be
collected, but also whether the cost of collection wi3' a greater than the
revenue or disproportionate to the anticipated gain. Alderman Korshak
further suggested that staff find out what sort of non -property tax measures
other cities have considered or instituted. He also suggested that the
summary include on the expenditure side a multi -year summary of options
rejected, and indicate how many years a particular option was brought up.
Alderman Korshak added that the burden should not necessarily be on the
staff to come up with a list of new items.
Alderman Korshak asked if there will be an examination of the Budget Policy
in general at the September 19 meeting tin relation to his memorandum
concerning the effect of the Consumer Price Index on the Budget Policy, left
over from the previous meeting's agenda). Alderman Collens responded that
Alderman Korshak's point is premature in that Council has an opportunity to
monitor the policy. Alderman Nelson retained Alderman Korshak's proposal on
the Committee's agenda.
User Fee Discussion
Mr. Asprooth made reference to his earlier discussion on having David M.
Griffith and Associates perform a study on inspection fees. Alderman
Collens called attention to an attachment to the David M. Griffith
presentation from the previous meeting listing typical fees and charges by
service area.
The Committee set Wednesday. October 19. 1988, as the date of its next
meeting.
With no further business to come before the Committee, the meeting was
adjourned at 9:35 P.M.
Minutes to be approved at the next meeting of the Budget Policy Committee.
Respectfully submitted,
A/X)nt
Keith Bennett, Staff
Draft - Not Approved
Minutes
Budget Policy Committee Meeting
of October 19, 1988
Members Present: Aldermen Korshak, Larson, Morton and Nelson
Members Absent: Aldermen Collens and Juliar
Staff Present: Joel Asprooth, City Manager; Keith Bennett,
Assistant to the City Manager; Robert Shonk,
Finance Director; Bruce Zimmerman, Assistant City
Manager
Others Present: Ira Golan, Chamber of Commerce
Presiding Official: Alderman Nelson, Chair
Summary of Action:
The meeting was called to order at 7:50 P.H.
Minutes:
The minutes of the August 16, 1988 meeting were approved as submitted.
Proposed User Fee Study
Mr. Asprooth advised the Committee that when this matter came before the
Administration and Public Works Committee, concerns were raised about the
advisability of raising inspection fees under any circumstances,
specifically inspection fees and building permit fees. He indicated that he
explained to the Administration and Public Works Committee that the proposed
study was a first step to look at one portion of the operation. The
Administration and Public Works Committee had requested further information
on studies that David M. Griffith and Associates (the prospective
consultant) had performed for Skokie and Aurora. Alderman Nelson stated
that everyone on this Committee felt that such a study was a good idea. Mr.
Asprooth responded that he had received a sense from this Committee that it
was advisable, but cautioned that the Committee should be cognizant that
there are political limitations with regard to user fees. He added that he
feels that there are benefits to engaging in such a study regardless of the
action taken concerning the results. Alderman Korshak indicated that the
resistance to the idea of a user fee study may be a result of a feeling that
the increased revenues create an encouragement to spend. Alderman Nelson
asked if the Committee had any problem with endorsing the idea of a study,
and the response was that there was none. Alderman Nelson suggested that
those members of the Committee who are so moved should speak up when the
proposal is reconsidered by Council.
Discussion of Non -Property Tax Revenues
Alderman Korshak asked if it were true that there is no way to know who
(businesses) is and is not paying the sales tax. Mr. Asprooth responded
that some specific information is confidential. He noted that some
municipalities have been forced to refund significant sums remitted in error
Minutes of the Budget Policy Committee Meeting
October 19, 1988............ Page Two
due to erroneously ascribed locations of businesses. Alderman Korshak asked
if the City can get documentation from the State that can aid in verifying
businesses. Mr. Shonk indicated that the State updates a list of new
retailers, businesses starting up, businesses shutting down, and businesses
moving.
Mr. Asprooth directed the Committee's attention to the analyses of
non -property tax revenue items that were distributed to the Committee prior
to the meeting. He indicated that these represented taxes that are not now
imposed, but, with the exception of an employee head tax and a motor fuel
tax (permissible under other legislation), are permitted under the new Sales
Tax Reform Act. Alderman Nelson responded that he is against all of these
measures, but finds the increase in the Hotel Tax to be the least
unpalatable and the only one that makes sense from a logical standpoint.
Alderman Morton asserted that she is likewise unwilling to support any of
the measures. Alderman Larson asked Alderman Nelson what sort of revenue
measures he would support if all of those presented were rejected. Alderman
Nelson responded that his thrust is toward reducing expenditures, but he
cannot get support for such efforts. Alderman Korshak asked if the
Committee was saying to the City Manager that it has some other source of
funds in mind. Alderman Nelson stated that not enough attention has been
paid to achieving economies.
Alderman Morton stated that City government is continually pricing young
people out of Evanston, and that the only sensible way to approach the
budget is to cut and retrench until such time as a more favorable economy is
in sight. She added that the stance taken by the full Council not to cut
programs is foolhardy. She wondered if this stance is being taken simply
because the City has the power to tax. Alderman Morton criticized the
Council for an inability to say that it has made mistakes after it had added
programs for any number of political reasons. A discussion followed as to
how the City came to the point where a $1.6 million shortfall was
projected. Mr. Asprooth reiterated that that was a preliminary estimate
that contained cautious assumptions on items such as refuse disposal costs
and employee health insurance that have experienced spiraling growth in
recent years.
Alderman Morton asked, as an example, why Recreation programs could not be
reduced to a level at which they are totally supported by fees. Alderman
Nelson indicated that he viewed the Council's decision on cuts as being
limited to personnel. This was disputed by several Committee members, but
It was pointed out that there are no substantial program reductions without
corresponding personnel reductions. Alderman Larson asked how much the Real
Estate Transfer Tax could be increased. Mr. Asprooth indicated that even
though those persons who are leaving pay that tax, it is an unpopular tax.
Alderman Korshak asked at what point the gap narrows. Mr. Asprooth pointed
out that the Consideration of revenue options is one phase of the process,
and that it was his intent to have the Committee take a position on the
items presented at this meeting. He added that the administration was in
the midst of the staff budget process, and that revenues and expenditures
generally come in line in January.
Minutes of the Budget Policy Committee Meeting
October 19, 1988............ Page Three
Alderman Larson asked if it were possible to defer street pavings for some
period of time, and was informed that it was. Alderman Nelson suggested
that the City could defer road building in order to build the Library, and
pave those roads later. Alderman Larson suggested freezing the salaries of
exempt personnel. Mr. Asprooth indicated that the effect of such a move
would be minimal, and that the idea would be more appropriately discussed
during an executive session.
Alderman Larson noted that it costs a certain amount of money to have a
separate Township government where the boundaries of the Township are
coterminous with those of the City. Therefore, he added, it would be useful
to have an estimate of the cost or savings to the taxpayer of eliminating
the structure of Township government and structurally combining the Township
and the City. Alderman Korshak stated that the second half of the proposal
has been well researched, but the only problem is the will to pass it.
Alderman Larson added that he is not implying that there should be any
diminishing in the standard of living of General Assistance recipients, but
that it should be explored whether one municipality provides the means to
provide services better. He further added that this does not imply laying
anyone off, that a commitment can be made to maintaining the current
Township staff as City employees. Mr. Asprooth pointed out that any move to
disband Township government or combine it with the City requires a
referendum.
Alderman Larson stated that he would like to see some analysis of the impact
of freezing or limiting exempt salary increases. It was pointed out that
Township issues are under the jurisdiction of the Human Services Committee.
Alderman Larson stated that he simply wants the financial aspects of such a
consolidation studied within this (Budget Policy) Committee, and agreed that
the programmatic aspects should be considered by the human Services
Committee. Mr. Asprooth pointed out that the Council needs to include the
assistance of the Township staff. Alderman Morton pointed out that the
proposed consolidation presents several political implications with
disruptive impact. She added that when there were prior problems with
Township government, she would have been in favor, but that she has seen
much significant improvement in the administration of Township affairs under
the current regime. Alderman Larson stated that the Township is carrying a
surplus of 5500,000, primarily to avoid having to borrow. The Committee
adopted a motion to get information on the financial implications of
assuming Township functions into the City provided that Alderman Larson goes
to the Human Services Committee and to appropriate Township officials to
discuss the matter (Alderman Morton voting no). Alderman Nelson remarked
that the governments almost were consolidated approximately 10 years ago,
and that the only reason Township government was retained was because it was
receiving Federal Revenue Sharing dollars.
A motion was made to bring to the full Council the issue of increasing the
Real Estate Transfer Tax by one-half percent. Alderman Larson expressed his
opposition. Alderman Korshak declared that that the only reason he would
vote no is because he is reluctant to support any new taxes or tome to the
citizens for more money until Council is prepared to come to grips with a
major tax on Northwestern University. Alderman Morton echoed that
Minutes of the Budget Policy Committee Meeting
October 19, 1988............ Page Four
sentiment. Alderman Nelson declared that he is unprepared to support any
increases in taxes at this time. Alderman Horton inquired if the Housing
Fund dollars were unused, could they be borrowed by the General Fund. Mr.
Asprooth responded that the Housing Fund has no income other than interest
income, and the use of it is restricted by Council policy to housing. He
added that some justification for borrowing from the Housing Fund could be
developed, but he would be wary of such borrowing without a committed
repayment source. Alderman Nelson suggested making a grant to the General
Fund to fund housing inspections, for example. Alderman Horton inquired
about the possibility of bank borrowing. Mr. Asprooth responded that that
would constitute a general obligation of the City, with accompanying debt
service and other related costs. He added that borrowing from any fund
means moving something back programmatically. The motion on the Real Estate
Transfer Tax was defeated (Alderman Larson voting yes). Alderman Larson
explained that he sees the Real Estate Transfer Tax as a tax on realized
gains as compared to the Property Tax, which he termed as a tax on
unrealized gains.
Alderman Korshak moved that the Committee begin serious consideration of
increasing the Hotel Tax to 5% and hold a public hearing to consider the
palatability of that tax. That motion was passed, and was unanimously
amended to include consideration of the Real Estate Transfer Tax increase.
The hearing was set for Wednesday, November 9, at 7:30 P.M. in the Council
Chambers. Alderman Nelson commented on the Sales Tax collection reports and
noted that receipts are thus far in line with projections. He added that
with regard to the Cigarette Tax, the argument for reducing the rate is not
being supported by the results. Mr. Asprooth indicated that that tax would
fall $75,000 short according to current projections. Alderman Nelson moved
to have consideration of restoring the former Cigarette Tax rate added to
the November 9 hearing, but there was no sentiment among the Committee for
doing so. Alderman Nelson made reference to a letter from the Robert Crown
Advisory Board regarding his suggestion to sell off certain capital assets.
With no further business to come before the Committee, the meeting was
adjourned at 9:29 P.M.
Minutes to be approved at the next meeting of the Budget Policy Committee.
Respectfully submitted,
Keith Bennett
Staff
Draft - Not Approved
Minutes
Budget Policy Committee
Public Hearing
of November 9, 1988
Members Present: Aldermen Collens, Juliar, Korshak and Larson
Members Absent: Aldermen Horton and Nelson
Staff Present: Alderman Rainey; Judith Aiello. Assistant City
Manager; Keith Sennett, Assistant to the City
Manager; Robert Shonk, Finance Director
Presiding Official: Alderman Collens, Acting Chair
Summary of Action:
The meeting was called to order at 7:40 P.M. The purpose of the hearing was
to hear public input on two revenue proposals:
(1) An increase in the Hotel Tax from its current 2% to 5%; and
(2) An increase in the Real Estate Transfer Tax from its current
1/2% to 1%.
MINUTES
The minutes of the October 19, 1988 meeting were approved as submitted.
TESTIMONY AND PRESENTATIONS
The Committee heard comments from the following individuals:
Scott Wilson, Director of Sales. Omni Orrington Hotel - Mr. Wilson
expressed his feeling that the proposed Hotel Tax increase would be
bad for the City of Evanston. He said that there is a tendency to
look at hotel guests as people who are merely visiting for a short
period of time, but that they should be viewed as people who are also
shopping, eating, and otherwise generating business and dollars in
Evanston. He stated that the proposed increase would raise the tax
on hotel rooms in Evanston from 8% to III (also counting a state tax
of 6%). thus raising it above the rate in Skokie (9%) and equal to
the rate in Lincolnwood (11%). The effect would be to eliminate a
competitive advantage that Evanston hotels have over other hotels in
those communities. Mr. Wilson added that the Allen Center at
Northwestern University, which is not subject to the tax, recently
added 100 rooms. In response to a question by Alderman Juliar, Mr.
Wilson indicated that the occupancy rate at the Orrington during the
1970's was in the range of 70% to 75%, but has been on the decline
over the past few years and now stands in the mid -sixties. Discussion
,1 nlle I . . . in n qp i 11 .
BUDGET POLICY COMMITTEE -PUBLIC HEARING
Minutes of 11/9/88 . . . 2
ensued as to whether the amount of tax is an important factor to a
potential hotel customer as compared to the total rate. Mr. Wilson
indicated that when a customer inquires about the daily room rate, he
is told the straight room rate exclusive of taxes. In response to a
question about the makeup of the hotel's clientele, Mr. Wilson stated
that business travelers make up 60% of the quests (O'Hare based
airline crews comprising approximately 20% of these), with the
occasional or "transient" customer making up 40%. It was pointed out
that the nearest hotel to downtown Evanston, the North Shore Hilton,
has a lower room rate than the Orrington. Mr. Wilson responded that
the North Shore Hilton is able to beat the Orrington's rate because
the North Shore Hilton has more rooms to fill.
Mr. Wilson was accompanied by Robert Stanfield, General Manager of
the Omni Orrinxton Hotel, who echoed his comments.
Paul Starke, General Manager, Holiday Inn - Mr. Starke stated that
prospective hotel guests look at the total package and that the
current tax rate gives Evanston hotels a bit of a competitive
advantage. He added that there has been increased hotel competition
along the Interstate 94 corridor, and that hotels in locations such
as Deerfield are able to beat the Holiday Inn's rate because they
have more rooms to fill. In response to a question from Alderman
Juliar on occupancy levels, Mr. Starke stated that the Holiday Inn
has been in the low -to -mid 60% range for the past year.
Alderman Collens asked what brings in those travelers who stay in
Deerfield and similar locations. Mr. Starke indicated that this was
mainly corporate business. He added, for an example, that Washington
National how houses its corporate guests at the North Shore Hilton.
At this point, Mr. Stanfield of the Orrington Hotel interjected that
Evanston is losing the corporate business of such firms as Anixter
and Bell & Howell. Mr. Starke stated that in terms of bidding for
group business, Evanston hotels have a competitive edge on downtown
Chicago, for example. Alderman Larson commented that he noticed that
several office developments in Lake and suburban Cook Counties have
hotels as part of those complexes, and indicated that he does not
know to what extent Evanston could compete with those hotels. In
response to a question, Mr. Starke indicated that the rate the
Holiday Inn quotes to prospective customers is the rate before
taxes. Other competitive disadvantages pointed out by Mr. Starke
included the lack of public transportation in Evanston to and from
the airport, and lack of access to the highway system. In response
to this, Alderman Korshak pointed out the existence of train lines
and bus routes, as well as limousine and shuttle bus service.
Alderman Korshak added that one factor in a hotel's attractiveness to
potential customers is the availability of nearby diversions and
after -dinner activities.
BUDGET POLICY COMMITTEE -PUBLIC HEARING
Minutes of 11/9/88 . . . 3
Gerald Gordon. 1228 Lake Street - Mr. Gordon stated that the Real
Estate Transfer Tax is onerous and is a way of getting around
Council's Budget Policy limitations. He indicated that the City saw
a surplus of $395,948 at the end of fiscal year 1987-88, and at least
$800,000 over the past two years. Mr. Gordon stated that it did not
seem to be appropriate for the City to look for new sources of
revenue while running surpluses. Mr. Gordon repeated an earlier
statement that increased sales of water to the Northwest Water
Commission, because of the recent summer drought, represented a
windfall that should go back to the taxpayers instead of going toward
sewer improvements. Alderman Collens pointed out that to do so would
be at variance with established Council policy. Alderman Korshak
asked for a response from Mr. Shonk in two areas: (1) the
correctness of Mr. Gordon's figures and, (2) Mr. Gordon's
Interpretation of facts and circumstances. Mr. Gordon indicated that
the City's cash forecast as laid out in the Budget is off by some
$1.4 million, and as such, it cannot be adequately determined whether
the City can appropriate any surplus. Alderman Collens stated that
it would be helpful if before the next meeting of the Committee, Mr.
Shank could have some dialog with Mr. Gordon.
Ira Golan, Executive Vice President, Evanston Chamber of Commerce -
Mr. Golan declared that the revenue measures under consideration are
not needed if there are other ways of balancing the budget. He
stated that the possibility exists that the City will increase
expenditures simply because it has the ability to increase revenues.
He added that there was a balance of some $318,000 in the Economic
Development Fund, and that Real Estate Transfer Tax receipts appeared
to be running some $200,000 above budgeted revenues. Mr. Golan asked
how much of that revenue has been spent and for what purposes. Mr.
Golan also mentioned that there was some $475,000 budgeted for
improvements to the Parking Garage that may or may not be spent. Mr.
Golan stated that a major factor in the local economy is the hotel
business. He added that Evanston has suffered major business losses,
and therefore, there has been no demand to add hotel space in
Evanston. He further added that if hotel business is seeing
slippage, slippage will also be seen in retail sales and other
related areas. Mr. Golan stated that hotels are growing in other
communities because corporate business is growing there. With regard
to the Real Estate Transfer Tax, Mr. Golan statF!d that there are
other types of dollars available, and these, should be examined
carefully before considering any new revenues. Alderman Korshak
expressed surprise that no realtors were present, and suggested that
perhaps that fact sends a message. Alderman Collens asked how
realtors handled the administration of the Real Estatee Transfer Tax.
Alderman Rainey responded that when she recently sold one home and
bought another, there was never any discussion of it, and that she
did not miss the dollars that were paid as a result of the tax. Mr.
Golan stated that the point he was atLempLing to make was that the
City was setting up streams of revenue without having established
BUDGET POLICY COMMITTEE -PUBLIC HEARING
Minutes of ll/.9/88 . . . 4
their need. Alderman Larson expressed an opinion that the tax should
be graduated. Alderman Korshak declared that there appeared to be
two sacrosanct subjects in terms of Council discussions: the
Research Park and Northwestern University. He stated that he will
vote for no tax increases, even at the risk of confronting an
unbalanced budget, until this was addressed.
With no further business to come before the Committee, the hearing was
adjourned at 9:20 P.M.
Minutes to be approved at the next meeting of the Budget Policy Committee.
Respectfully submitted.
Keith Bennett, Staff
n11100Ii !gorl i�rP illp�jgllll IF +1 1 111111111 III IIII oil 1111;1111i1��@q���i����nu"Il�P�'''R�
�u