Champaign city revenue and key tax streams have shown "modest" gains recently while others remain flat, and a city financial official says the timing may be right to look at small tax increases to restore funding to high-priority budget lines.
CHAMPAIGN — Finance Director Richard Schnuer says the city is in a "sound fiscal position" as it comes out of several years' worth of spending cuts, and the question now becomes whether council members want to begin restoring some services that took hits during the recession.
Revenue and key tax streams have shown "modest" gains recently while others remain flat, and Schnuer said city income on its own will not return Champaign to where it was before the recession. But, he said, if city council members agree, the timing may be right to look at small tax increases to restore funding to high-priority budget lines.
City council members will kickoff those talks when they meet at 7 p.m. Tuesday in the Champaign City Building, 102 N. Neil St. Tonight is the first in a series of discussions during the next few weeks leading up to the adoption of a new budget in June.
"We've brought down costs close to the rate of revenue increases," Schnuer said. "Unfortunately, it's close enough where it's going to be tight for the foreseeable future."
Government budgeters throughout the state are expecting a slow recovery as the nation continues to come out of four-plus years of economic recession. After an overview of the budget picture tonight, staffing at the library and police and fire departments will be reviewed during a follow-up discussion on May 14. Then, on May 21, city council members will talk about how they want to deal with economic development incentives and funding for things like roads, sidewalks and sewers.
All of those areas took budget cuts during the past few years. Now, Schnuer said the city's fiscal position is among the strongest in the state as the nation begins to recover.
"Really, the question we think we have before us is where do we go from here," Schnuer said.
Library officials said last week that they would have to cut 31 hours of operation  per week at their main and branches libraries if they do not get more funding. The library depends almost entirely on property taxes to operate, and director Marsha Grove said property values can no longer sustain the library on its current schedule.
She said the library would need $500,000 in additional funding to maintain its current schedule, but the library's request will be in competition with other city departments asking for money.
The police department has cut six sworn officers and five civilian employees during the past few years, and the city council may consider restoring some of that staff.
The fire department narrowly missed losing an engine on the west side of the city before officials restored that funding for one year. That has nearly run out, and city council members could consider replacing that money permanently.
Discretionary funds for economic development have nearly been zeroed out, and the city's capital program has taken a hit as officials looked to fund their day-to-day operating expenses. That means projects like road repairs, sidewalks and the relocation of fire station 3 closer to the city's north side to provide better coverage and community services have gone unfunded or underfunded.
Champaign Mayor Don Gerard said that, in his mind, the question is not which of those programs is of the highest priority, but rather how to equitably fund all of them.
While the programs city officials will explore during the next few weeks are not necessarily new — they were all part of relatively deep spending cuts during the past five years — existing city revenues alone would not cover all those expenses, Schnuer said. Revenues are struggling to return to the level they were at before the recession took hold in 2008, and city council members would have to look at small tax raises or new revenue sources to fund one or all of those options.
The tax raises city officials would consider, Schnuer said, only would bring Champaign in line with comparable cities. A 0.25 percentage-point increase in the sales tax rate — from 1.25 percent to 1.5 percent for the city — could raise $2.8 million in new revenue, Schnuer said.
According to city documents, that would put Champaign above Urbana and Rantoul — which each have 1.25 percent city sales tax rates — but would put it even with Bloomington, Decatur, Normal and Peoria. It would, however, put Champaign near the top of comparable central Illinois cities in total sales tax rates — at 9 percent — when you include sales charges put in place by other Champaign County taxing bodies.
A sales tax increase will only be one option in a number of examples city administrators may ask council members to consider.
The good news, though, is that the city can even consider restoring some of those programs. During the past couple years, officials instituted a local gas tax and a storm water fee just to avoid cutting more deeply into capital programs.
"We're certainly out of the phase where we're having to do substantial reductions every year — sometimes twice a year — just to get to a balanced budget," Schnuer said.