Prussing: Proposed budget holds the line

Prussing: Proposed budget holds the line

URBANA — Mayor Laurel Prussing says her budget proposal for the fiscal year beginning July 1 is another "hold-the-line" financial plan, made particularly difficult this year by a relatively new state law that exempts some hospitals from paying property taxes.

A quarter-cent sales tax increase from the beginning of 2014 is helping, she said, and the state and federal governments have come through on paying for big road projects. That, combined with budgeting for no increases in employee health care costs and wages, is keeping city finances under control.

"I think we're managing to provide a good level of services by the steps we've taken to tighten the budget and the new revenues we've had to rely on," Prussing said.

But the mayor still blames Carle Foundation Hospital's property tax-exempt status for putting the city in a tighter bind than it otherwise would have been in.

The proposed $34.27 million operating budget, which covers the city's day-to-day expenses, is nearly 4 percent higher than the current fiscal year's spending plan. City officials are expecting to collect $34.14 million in operating revenue, which is about 4.4 percent higher than this year.

That means budgeters are again planning to spend down some of the city's cash reserves. Comptroller Rich Hentschel said the $4.82 million general fund balance — essentially the city's rainy-day fund — at the end of this year is an "adequate" amount.

City officials are again budgeting to spend some of that money — $131,055 next year — but Hentschel said he hopes conservative projections will move that number closer to zero. It's a "pretty balanced budget," Hentschel said.

On the other hand, the city's total budget — which includes capital, equipment and other special programs — will drop by about $9.4 million, from $70 million this year to $60.6 million next year. A number of factors force that number to tend to fluctuate from year to year more than typical day-to-day expenses. Total revenues will drop, too — from $58 million to $57 million.

"We've been through many years of very tight budgets," Prussing said. "It was the big recession that hit us, the Great Recession. We've been trying to hold the line on budgets for quite a few years, and just when our other revenues were starting to recover, like the sales tax and the income tax, then we got hit with this property tax from Carle."

Prussing was talking about a 2012 state law that exempts hospitals from paying property taxes if their "charity care" exceeds the amount they owe in taxes. The relatively new exemption for Carle has prompted several Urbana taxing bodies to raise their rates — the city last year chose not to raise property taxes.

The city is fighting the constitutionality of that law in court through its ongoing lawsuit with Carle.

"We expect to win that lawsuit," Prussing said.

Carle spokeswoman Jennifer Hendricks-Kaufmann said in a statement that the effect of the Carle tax exemption is not as significant as the mayor makes it seem.

"We're focused on doing what's right for our patients by protecting the community's health care resources, and that's why we sought an exemption for former clinic properties," Hendricks-Kaufmann said. "The exemptions granted resulted in a $300,000 impact to the city against a $60 million budget, which doesn't explain the continued budget challenges."

The Urbana school and park districts, which had been holding years' worth of Carle property tax money in escrow, have settled with the hospital. The school district kept about $5.1 million of the $10.9 million in escrow, and the park district kept about $900,000 of $1.9 million.

"It's unfortunate city officials repeatedly point to Carle when they could reach an agreement like Urbana school and park districts that could relieve any burden for taxpayers," Hendricks-Kaufmann said in the statement. "This problem is, in fact, the city's choice."

Despite the ongoing feud, Urbana will see some major capital projects. The plan for next year includes $7.1 million for the construction of Olympian Drive in north Urbana and a $7.7 million widening of High Cross Road between U.S. 150 and Florida Avenue. Both projects are being financed entirely with state and federal funds, not local tax money.

City officials are also planning to rebuild Windsor Road between Philo Road and Race Street. The project will cost in excess of $5 million, but $2.5 million will come from the state. Budgeters plan to issue $2.8 million in bonds to cover the rest. The bonds will cost $320,000 annually during the next 10 years to pay off.

"The big highway projects are thanks to the state and federal government because we would never be able to afford those," Prussing said.

City officials also plan to stave off big increases in employee health insurance costs, and they are not budgeting any wage increases. They are in negotiations with the city's labor unions right now.

"We don't know what the outcome's going to be," Prussing said. "If it goes to arbitration, it's completely out of our hands."

Sections (2):News, Local

Comments embraces discussion of both community and world issues. We welcome you to contribute your ideas, opinions and comments, but we ask that you avoid personal attacks, vulgarity and hate speech. We reserve the right to remove any comment at our discretion, and we will block repeat offenders' accounts. To post comments, you must first be a registered user, and your username will appear with any comment you post. Happy posting.

Login or register to post comments

Jam wrote on May 13, 2014 at 7:05 am

The Mayor of Urband needs to grow up a little bit.  Carle won their legal battle.  She should seek out Carle for a amicable agreement and stop creating battle lines.  Carle is the largest employer next to the UI in Urbana and provides good jobs that pay good wages that are spent in Urbana.

enoughalready wrote on May 13, 2014 at 8:05 am

Agreed.  It's over.  I wonder if she already spent the money.  That would explain why she won't let it go or settle.  If she knows she can't pay the money back, she will do anything to delay the reckoning while taxes are raised to build up enough cash for the eventual payback.

787 wrote on May 13, 2014 at 8:05 am

Is there a separate line item in the budget, specifically for the mayor's legal costs?

Also, I thought the President told us that the recession ended years ago, back in 2010...

ilmsff7 wrote on May 13, 2014 at 1:05 pm

The mayor is starting to embarrass herself and the city.  Everyone has budget constraints.  Deal with it instead of demonizing the second-largest employer in Champaign County. 

The story says the School District and the Park District dealt with Carle, and they got to keep some of the protested revenue.  If Urbana keeps this up, they'll be left with nothing.  Time to face facts, look in the mirror, take responsibility, quit throwing a tantrum, deal in reality.

Local Yocal wrote on May 16, 2014 at 10:05 am
Profile Picture

Despite the storm over Olympia Drive over the years, it appears the Mayor slipped in the $7 million dollar project while no one was looking. I'm curious, three things:

1) how many local residents currently unemployed will be able to get a job from the project 2) where did the opposition to the project go? (to the bank with the money from a land purchase?) 3) and if we build it, who's coming?

And for the last time local politicians: just because it's state or federal grants, doesn't mean our state income taxes, our state sales taxes, and federal income taxes aren't funding the project. It might hurt less, but grants are taxes. I guess local politicians are perfectly happy with the ginormous deficit spending at the state and federal level as long as it keeps road money coming.  

So when the state reneges on DSC, or Prairie Center, or Medicaid, or mental health, or pension payments because it can't afford those in their budget, local politicians are going to pick up the slack with that rainy day contigency fund (you know, after the shovel ceremonies out at Olympia drive.) 

Sid Saltfork wrote on May 16, 2014 at 2:05 pm

Good comment.  The comment on grants, and taxes is right on the mark.

Sid Saltfork wrote on May 16, 2014 at 2:05 pm

Local's comment was so good that I praised him twice.  :)   Good comment.  The comment on grants, and taxes is right on the mark.

pattsi wrote on May 19, 2014 at 4:05 pm

If I have read the newspaper correctly, is there not a road widening project beginning along 130 in addition to many others planned for the summer construction season?