Village's 2023 Proposed Budget & Questions

Village's 2023 Proposed Budget & Questions
Posted on 11/10/2022

The Village’s proposed 2023 Budget reflects a 0% property tax levy increase, which meets a Strategic Priority of the Village Board to keep any proposed property tax increase as low as possible. The $205.4 million budget includes an increase of 2.8%, or $5.6 million, from last year’s total amended budgeted expenditures for all of the Village’s operating, capital and other funds. The Village’s fiscal year runs from January 1, 2023 through December 31, 2023.

The 0% increase in the property tax levy and reduction in expenditures are due to a variety of factors, including:

  • Sales and Home-Rule Sales Tax receipts reflecting a 22% to 27% increase from the 2022 Budget;
  • Income Tax receipts reflecting a 35% increase from the 2022 Budget;
  • Solid 2021 Pension Fund interest earnings and use of prior years’ surpluses to pay down future Police and Fire Pension liabilities;

The proposed 2023 Budget plans continued investment in the Village’s Stormwater System including the Evergreen-Maude Storm Sewer Improvements ($850,000). The Village will also be continuing with the ongoing Backyard Drainage Improvements ($300,000) project and the Storm Sewer Rehabilitation/Replacement Program ($500,000).

The Budget also continues to focus on maintaining our roads and water systems with funding included for various capital projects including:

Street Program ($5,600,000 – Capital Projects Fund)
This is an ongoing program to resurface or rehabilitate existing deteriorated street pavement and curbs.

Wilke Road Resurfacing & Multi-Use Path Extension ($2,761,500 – Capital Projects Fund)
This project includes resurfacing, curb and sidewalk removal and replacement, Americans with Disability Act (ADA) improvements, as well as the extension of the multi-use path along the east side of Wilke Road from Algonquin Road to Sunset Meadows

Watermain Replacement Program ($4,100,000 – Water & Sewer Fund)
This is an ongoing project to replacement aging watermain infrastructure. The proposed $4,100,000 annual expenditure is enough to replace an industry standard of 1% of the Village’s overall watermains.

Street Rehabilitation Program ($3,800,000 – MFT Fund)
This is an ongoing street rehabilitation program consisting of the reconstruction of significantly deteriorated street pavement, curbs, and concrete panels. 

Ask Questions About Proposed Budget

We invite residents to review our proposed 2023 Budget, which represents the Village’s plan for allocating its resources.  Answers to all questions received by the deadline of will be posted on the Home Page of our website, under "Trending" on Thursday, November 10. Any questions received after the deadline will be responded to and posted as staff can 

The Village Board’s review of the proposed 2023 Budget will begin Monday, November 14 at 7 p.m. in the Board Room located on the third floor of Village Hall, 33 S. Arlington Heights Road. A second meeting will be held on Wednesday, November 16 at 7 p.m. and if needed, a third meeting will be held on Thursday, November 17. All meetings will be held at 7 p.m. in the Board Room.

Click here to review Budget Variances by Department (a document listing and explaining budget variances by Department for the proposed 2023 Budget.)

Questions and Answers from Community Regarding Budget as of Nov. 10, 2022

Anyone who would like to ask questions regarding the proposed budget, please email [email protected]

1. Question:  I would like to see a budget reform to offer both seniors in a household the senior rate of $12.00 per Village auto sticker.  Offering one per household was ok in 1959, when most homes only had one car.  Today’s senior household, will most likely have two cars.  Why punish the second senior, as many nearby Villages are eliminating this tax altogether.  Inflation is killing those of us that rely on Social Security as our main source of income.  This elevated tax is not fair to the second senior.

Answer:  Thank you for your suggestion.  The Village started selling the 2023 vehicle stickers in October 2022, so making a change for the 2023 sticker season is not feasible at this time.  However, this suggestion will be included as part of the 2024 Budget discussions that kick off in June 2023.

2. Question:  What restrictions are there for how general funds can be used?  Could they go to local schools?  Village expenses have increased by 23% in (three) years from $167 million to $205 million.  What is being done to control expenses?  What would the State recommend as the appropriate reserve, as a percent of annual budget for a city to maintain?

Answer:  In regard to the first question, the local school districts have their own Boards and taxing authority in the State of Illinois.  The Village, School Districts, and Park District are separate and distinct governing bodies that provide specific services.  The funds for these separate governing units are not commingled, and the boundaries of these units of government are not the same.

The second question compares the Village’s actual 2020 operating and capital expenses to the 2023 proposed budget.  The Village has historically developed its budget based on a conservative forecast of revenues.  In addition, full staffing levels have been assumed without regard to temporary vacancies that occur each year.  As a result, we can usually count on actual expenses coming in under budget.  However, the economy has been very volatile as of late due to inflation, supply-chain issues, employee shortages, and an increasing federal funds rate.  From a long-term perspective, the Village works to keep property taxes as low as possible, and for the fourth year in a row the Village is proposing a 0% increase in its property tax levy.  To accomplish this, the Village continues to look for ways to trim expenses and improve operational efficiencies.  Recently, the Village has implemented a long-term debt plan and paid down a portion of the pension funds unfunded liabilities, all of which has helped moderate our property tax levies.

Maintaining adequate reserves helps ensure the Village’s excellent bond rating, which lowers interest charges associated with that rating.  These reserves also provide a source of funds for extraordinary weather-related events, pandemics, or other damages, and provides flexibility needed to make prudent decisions during times of economic uncertainty.  The State of Illinois does not prescribe an appropriate reserve, but the Village maintains a reserve level based on levels suggested by the Government Finance Officers’ Association, the Village’s auditors, and bond rating agencies.  The Village’s General Fund reserve level continues to be comparable to that of our surrounding communities.

3. Question:  Reviewing the 2023 budget it looks like there is a $420+ million surplus.  Is that correct?  And if so, is there a reason the Village is carrying two years of operating income in reserves when all other surrounding Village’s are running with $20-$30 million of reserves (3-4 months) of operating expenses?  If that isn’t the correct amount, what is the reserve the Village has budgeted at the end of fiscal year 2023?

Answer:  The total projected year-end fund/reserve balance for all Village funds as of the end of 2023 is $410 million.  However, please note that $288 million of that is for Police and Fire Pension Fund investments that are used to pay for all future payments to our public safety pensioners.  The Village has continuously funded at least the annual required contribution amount, and these pension funds currently have funding ratios of 80-90%.  The long-term goal is to fund 100% of our pension obligations.  Other large reserves are maintained in our Motor Fuel, Municipal Parking, Capital Projects, Water & Sewer, and Fleet Funds to pay for major infrastructure projects over the next five years.  As shown on pages 17 and 18 of the Proposed 2023 Budget, the Village is planning on spending over $181 million on streets, water and sewer mains, vehicles, and other capital costs from 2023 through 2027.  A good portion of these expenses will be funded by available reserves.  This long-term planning helps the Village maintain a consistent level of infrastructure investment, while keeping property tax levies as low as possible.

The comparison of reserves between area Villages is usually focused on the General Fund operating reserve.  At the end of 2023, the Village is projecting a General Fund reserve balance of $46 million or 54% of General Fund expenditures.  In recent years, the Village has maintained a reserve level of around 40%, but recent unusually large increases in sales and income tax receipts have pushed this level higher.  In the last couple of years, the Village Board has also elected to draw down these reserves by using some surplus funds to pay down the unfunded liabilities in the Police and Fire Pension Funds.  This has had the positive effect of increasing the funded ratio of these funds, which has lowered the required property tax levies for the pension funds.  Once again, the Village has worked to take a long-term view of the Village’s finances in an effort to smooth out economic highs and lows.  In 2023 and 2024 we are expecting volatile economic conditions due to inflationary pressures, supply-chain issues, and further increases in the federal funds rate.  As such, we are wary of potential sales and income tax receipt decreases that usually accompany economic downturns.