URBANA — A week after the city council signed off on a quarter-cent sales tax increase, Mayor Laurel Prussing gave more details on how she plans to close an estimated $1.15 million gap in the city's $34.9 million operating budget before the end of the fiscal year next June.
She said on Monday night that she is planning for $811,500 worth of spending cuts to complement $343,000 in new revenue from the sales tax increase. Her plan includes holding employee health care costs to a minimum and lowering the amount the city planned to pay to police and fire pension funds.
Prussing said now is a good time to hold off on $214,000 worth of payments to those pension funds this year with stocks recovering. In recent years, the struggling stock market hurt the investment returns those funds typically receive.
But while the stock market recovers, Prussing said, the city is able to make the smaller contribution to keep pace with what the city will need to pay out pension benefits in the future.
"As long as the stock market is doing well, I wouldn't expect that we would have to do an increase in our contributions," Prussing said.
She said the city's pension funds are in "good shape." That is because "we keep putting in the money that we're supposed to be putting in," Prussing said, adding that officials will examine how much they contribute to IMRF, too.
She also plans to reduce the $2.5 million employee health care budget by $500,000. She said the city budgeted $2.5 million last year but only spent $2 million, and she is hoping that is the case again this year.
"The biggest single thing that we can do is reduce our increase in health insurance to zero," Prussing said.
Other cuts include a three-month delay in filling three staff positions, which she says will save $56,000. That's in addition to $178,500 in spending cuts the city has already made in the public works and legal departments and at the police front desk.
The city is expecting to lose $1 million in property tax revenue after the state of Illinois approved tax exempt status for Carle Foundation Hospital earlier this year.
City council members on Monday night gave the initial go-ahead to spend $60,000 to replace an air conditioning unit that broke down in the city building in August. Prussing also plans to hire an information technologies director, a position that will cost the city $82,000.
Those contributed to the $1,154,500 budget gap, but Prussing said that issue can be solved between her proposed spending cuts and the $343,000 officials expect to collect from the new sales tax rate, which is effective Jan. 1.
That sales tax revenue is only half of what the city expects to collect in the future, as the quarter-cent increase takes effective halfway through the budget year, which runs from July to June.
"Obviously there are other ways to do this, but this is where my thinking is now," Prussing said.