The city of Pekin came out ahead in Fiscal Year 2016-17 but not as well as predicted in the annual budget.
The city brought in $36,015,838 in revenue and spent $35,884,552 for a $131,286 surplus in the normal operating budget. The city had predicted revenues of $40,343,217 and expenditures of $41,099,970, which would have meant a $756,753 deficit, according to the fourth quarter report by Treasurer Jim Wolf. Those figures are the total without extra expenditures such as sewer debt/construction, capital projects, economic development, vehicle maintenance and insurance.
The total of all funds with capital projects added in is $46,376,553 in revenues and $57,642,570 in expenses, which reflects an $11 million deficit. The deficit is inflated by money for large projects, such as construction on Veterans Drive moving in and out of the funds. The city had to pay $3.1 million on the Veterans Drive South project with the promise that the state will reimburse the city later this year. The disbursement of the $3.1 million hurt investment earnings because there is less money to draw interest on.
The Illinois Department of Transportation forced the city to pay the $3.1 million, said Wolf, which raised many questions from the Council regarding what happens if the state does not make good the promise to repay. The money came from the city’s motor fuel tax reserves.
Councilman Lloyd Orrick asked Wolf if the city should start rebuilding the reserves to make up for the $3.1 million.
“When the state repays us it will build those reserves back up,” said Wolf.
“So we just let the reserves drop?” asked Orrick.
“Well, we have no choice,” said Wolf. “We had to pay for that project — the state didn’t give us an alternative.”
Councilman Mark Luft asked when the last time was that the city received any money owed it by the state. Wolf said every month the state pays the sales tax, telecommunications, and motor fuel tax, but he added that from time to time the state runs behind a month or two on the sales tax it owes the city. A few years ago, it held up motor fuel tax payments. Everything else has been on time, said Wolf.
Luft said that with the state’s bond rating at just above junk, the city would draw the line on anything requiring state funding.
Wolf said, “We’re about the first state to drop to a junk bond rating. We haven’t quite gotten there, but I think S&P and Moody’s (may) be very close to making that additional downgrade, which no state has ever faced yet.”
City Manager Tony Carson said Engineer Mike Guerra pulled a couple of projects from consideration this year that the administration “felt we shouldn’t be going forward on.” He said the administration would not bring anything to Council for approval that state funding could be iffy on.
Councilman John Abel was explicit about the issues facing the state and how they could trickle down to the city.
“With (the state) sitting on $15 billion in unpaid bills ... are we seriously thinking of getting any kind of that $3.1 million back this year?” he said. “Is that in the realm of possibility?”
Guerra said he wasn’t sure if the repayment would be related to the budget stalemate. He said the money was appropriated in 2008 when an agreement was made with the state for it to pay for Veterans Drive South to be the new Illinois Route 9 and then sign over Court Street to the city.
In other line items, the sewer operations show a large profit because of increased rates. Wolf said the fund reserves have to be replenished for future wastewater projects and regular maintenance. Construction related costs have been deferred to next year.
The vehicle maintenance fund was profitable this year. In previous years, the department was not centralized — every department did their own vehicle work. The profit is due to revenue transfers from other departments.
Major revenue sources
The big difference in the retail sales taxes was related to $540,000 that the state had taken from the city in the previous year because of an overpayment but then refunded to the city in 2016-17. Wolf said sales taxes are “constant.”
“I believe that sales tax revenue for Pekin has remained constant even though there is a significant rise in online sales,” he said. “With the rise in online sales, our use tax has correspondingly risen as well.”
The restaurant food and beverage tax and the packaged liquor tax lagged for the first time since the taxes were imposed in 2011, while video gaming taxes continued to rise. Wolf said the video gaming revenues will start to level out once the market is saturated.
A $1 million transfer of funds this year from the school bus fund to the general fund was budgeted in the FY 2015/16 but not transferred until this year, so the statement includes the transfer.
Sewer fees are higher because of the increase in rates. Sewer finance charge revenue is much higher due to the increase in the penalty rate from 1.5 percent to 10 percent in the current year.
Follow Sharon Woods Harris at Twitter.com/sharrispekin