CHAMPAIGN – City budgets can get complicated. Fiscal planners spend months preparing for the next budget cycle.
And by the time they finish one, it's almost time to start on the next.
They start with broad forecasts looking at projected revenues and expenditures for as far as five years out. As they get closer to adoption of a final spending plan – as Champaign officials are now – they start looking at specifics: sales and property tax revenues to the dollar, cost of employee pensions, increases in health care costs, gas prices.
They even delve into abstract calculations: Which new developments will open in the next year? How many runners are signed up for the Illinois Marathon? How many residents will get 3G data service with their iPads instead of the standard Wi-Fi? How successful will the Illini football team be this year? The question of wins and losses could be a force behind how many out-of-towners flock to or away from Memorial Stadium, with their wallets in tow.
A decade ago, the answers to those questions may have influenced where city officials could expand services, but with revenues falling short of cost increases in a tight economy, budgeters are looking at which services can be saved.
Where the "budget team" meets is not the dimly lit, smoke-filled back room that the old cliche would have some believe. It is a bright, second-floor conference room on the corner of Neil Street and University Avenue. It has all the essentials: a long conference table and a projector prepped with PDFs full of numbers.
There are seven city employees here today, but sometimes more attend depending on what area of the budget is discussed. The usual office chatter fills time as they wait for all the participants to arrive, and they crack an occasional joke as they prepare for a much less light-hearted budget discussion.
City Manager Steve Carter takes the head of the table with a couple of his deputies to his left. Two employees are here from the finance department, including Finance Director Richard Schnuer. The human resources department also has two staff members as part of the budget team – with personnel accounting for the largest chunk of the operating budget, their presence and input is just as important as the finance team. And lately, layoffs have been an undertone of the conversations.
Human Resources Director Chris Bezruki fiddles with a pen held between both hands as the conversation gets started – the seven start rifling through packets of spreadsheets and graphs detailing the decreases and increases in certain revenues expected during the next fiscal year.
They are in their last phase of budget planning before they begin preparing a final draft for city council approval, which usually happens in June. While they are planning the next budget, they are working on finalizing reductions to the current budget.
"The ball's moving while we're planning," Schnuer said.
The city is working to implement $2 million worth of cuts and adjustments to the current year's spending plan – it includes hits to core services like police, fire and public works. Officials have created an option in which employees may apply for a buyout package to avoid a layoff.
The cuts the team makes now – like reductions to the police department's front desk service and firefighter staffing at Station 4 – will invariably have effects on next year's budget.
Schnuer can give only a rough estimate of what kind of cuts will be needed next year. According to numbers projected in the city's five-year forecast, the budget may need another $400,000 worth of cuts or fund transfers on top of the recurring expenses that already were cut this year.
Then again, that number could fluctuate by hundreds of thousands of dollars either way based on a number of factors: new information that may come out related to tax revenues or how many employees sign on to the buyout program, for instance.
But city administrators hope they will not need to make cuts as drastic as this spring's.
"Based on the financial forecast, there is reason to hope that any further reductions would be not as significant as they were from this year," Schnuer said.
He has said throughout the past months that it could be a long time before any service cuts can be restored as analysts predict a slow economic recovery.
There is a chance it could be sooner, though, depending on a city council decision this week.
Council members might choose to issue "pension obligation bonds," a way of paying off the city's police and fire pension liabilities and reducing the annual payment toward those funds.
Schnuer predicts the method could save the city $400,000 a year, an amount that "certainly could avoid further reductions or restore some of the prior reductions."
But the risk involved would be higher, and it would eliminate a degree of the city's financial flexibility. Schnuer believes the investment risk of the pension obligation bonds is too high for a minimal return, and on Tuesday, he will recommend the city council reject the idea.
"This is not going to completely change the face of our budget decisions," Schnuer said.
Some city council members have supported or at least have been curious about the idea, and the final decision will be up to them.
But while these conversations happen in the second-floor conference room of the City Building, employees on the streets – like the campus party patrol, Officer Ed Wachala at Centennial High School, firefighters in west Champaign and staffers behind the glass at the police department's front desk – will continue to do their jobs, even if they fear budget cuts will affect how they do it.