Village spending an election issue
Riding the budget woes
Updated: March 18, 2013 1:17AM
VERNON HILLS — A potential multimillion-dollar police station overhaul on the horizon has spurred budget talks among Vernon Hills trustee candidates.
Candidate Ted Sindermann said the Village Board is too comfortable spending money when the economic climate remains unsteady.
“If they stay on the track they’re on now, a problem is inevitable,” Sindermann said. “You can’t keep spending more money than you bring in.”
While village officials confirmed that surplus money has been added to the reserve fund in recent years, Sindermann referenced the recent $2.2 million loan to the park district as one cause for concern.
Longtime trustee – and current candidate – Barbara Williams said the board was meticulous in questioning Finance Director Larry Nakrin before approving the $2.2 million park district loan.
“I believe we are on a stable path because we wouldn’t have made the YMCA loan if we were not absolutely confident in our future revenue,” Williams said. “This village has had an A or AAA bond rating ever since I was (village president) in the early 90s. We are responsible with our money.”
Similarly, current trustee Thom Koch Jr. – also a candidate in the April 9 election – praised the cost cutting measure and said the village is making positive strides toward boosting revenue.
Koch referenced two residential development projects along Route 45 that will boost property tax revenue, as well as sales tax rebate programs that have installed retail anchors that should attract more business, including an eventual replacement for Walmart, which is leaving Vernon Hills and building a Super Walmart in Mundelein.
Sindermann said losing the $350,000 in annual sales tax revenue from Walmart must be considered before the village commits to any other large expenses.
“Something should have been done to save Walmart,” Sindermann said. “The world’s largest retailer, and you can’t find a way?”
Village staff attempted to barter with Walmart for years but the space was not readily available to expand the current Route 60 store into a super store.
Vernon Hills had a $2.2 million surplus in 2008. Finances began to change in 2009, when the budget had a $300,000 deficit. In 2010, $1.97 million was pulled out of the reserve fund to cover operational expenses.
For portions of 2009 through 2011, Nakrin was sending monthly revenue reports to board members and executive administrators.
“What made it so painful and scary was how those couple years of extremely low returns came after some of our strongest years of sales tax revenue,” Nakrin said.
Other factors, aside from a drop in sales tax revenue, included poor investment returns and a drop in building permits applications.
The $1.97 million deficit in 2010, according to Nakrin, actually encompassed a large expense from early retirement packages the village offered to employees.
Eight employees accepted the early retirement package. Nakrin said after the initial expense, Vernon Hills now saves approximately $1.2 million a year from salary, benefits and pension contributions to those former employees.
“Those eight retirements allowed the village to not go through the anguish of laying people off or issuing furloughs,” said Police Chief Mark Fleischhauer, who had one commander accept the buyout. “Mundelein laid people off, and Libertyville had both layoffs and furloughs. Those are big morale negatives that we were fortunate to avoid.”
About 70 percent of the village budget goes toward salaries, wages, benefits and pensions.
After the retirement package was taken off the table and various administrative jobs were combined, certain staff jobs were also not filled or merged in recent years to keep payroll down.
The village government had 128 employees in 2001 and was reduced to 99 employees between 2010 and 2012, until three new police officers were hired in early January.
Village Manager Mike Allison said the board also chose to delay several capital projects, like renovations and purchasing new vehicles.
A $2.3 million surplus was added to the reserve fund after the 2011 fiscal year, while another million was added in 2012.
The village’s reserve fund now has $18.5 million, but Nakrin considers it closer to $21 million.
“From my point of view, the $2.2 million YMCA money is a loan that we fully intend to recover,” Nakrin said. “It’s a loan. The only consequence is we not getting the interest from that money.”