CHAMPAIGN — The public got its first look on Tuesday night at next year's city budget — nothing too surprising in the immediate future, but officials say they are already looking at ways to avoid shortfalls in coming years.
The city council will look to pass the $76.4 million operating budget before the beginning of the fiscal year July 1. Officials were able to fill some holes with new revenue from a quarter-cent sales tax increase that went into effect at the beginning of this year.
The city council has already informally supported much of what went into the operating and capital budgets: Additional funding for the library to avoid severe cuts for another year, $550,000 to accelerate street maintenance projects after a rough winter and $150,000 to upgrade a Mattis Avenue pedestrian crossing.
Another $327,000 will go toward new economic development projects: $75,000 for a "virtual small business incubator," $225,000 for a small business assistance program and $25,000 for branding when officials figure out what the future is for Urbana-Champaign Big Broadband.
The budget presented Tuesday marks another year where the city did not have to dig deep into its pockets to find money for everything. It's maybe another sign of the area's slow economic recovery — as key city revenues like property and sales taxes took the brunt of the economic downturn, the recession years held a tight grip on the city's spending.
It does not mean the city is out of the woods yet, said Finance Director Richard Schnuer. Increasing costs are still outpacing the annual increases in city revenues — less so than they had been only a few years ago, but still by enough to where the city would find itself in a deficit situation sometime during the next five years if it took no action.
That five-year forecast, which runs alongside the budget each year, also shows only what would happen if city officials took no action to close those gaps.
"It can be very intimidating to look at a five-year forecast chart and watch the gap grow," said City Manager Dorothy David, but budgeters are already looking at ways to address the predictions.
The main concern is the cost of employee compensation, where salary increases and upticks in the amount the city contributes to employee pensions lately are closer to keeping pace with revenues like sales and property tax.
"But they're still greater," Schnuer said. "And even though the percent difference is not great, half a percent, a quarter of a percent adds up quickly."
In a separate discussion on Tuesday night, city council members heard proposed changes in how it structures pension contributions. This year's budget also includes an extra $250,000 for pension costs to mitigate some of the projected increases in the future.
Spikes in the cost of employee health care are also on city officials' radar. They say they are beginning to bring those discussions into negotiations with the labor unions.
"We want to make sure we have good quality benefits for our employees, but we want to do that in a way that's sustainable in the long term," David said.