The Village’s overall financial condition continues to be very strong despite the economic obstacles facing our country.  High oil prices, housing industry problems, credit market defaults, higher unemployment and reduced consumer confidence are all factors that should make 2008 an extremely challenging year.  2008 is being approached very conservatively as we await a better signal on the long-term economic trend.

Overall expenditures for 2008 are budgeted at just under $48 million which represents an 11.4% reduction from 2007.  The new police facility and village hall campus improvement project was recently completed.  This $15 million project was the main reason for increased budget costs in 2006 and 2007.

Similar to the last three years, the Village’s General Fund is proposing to utilize a portion of cash on hand to balance 2008’s operating budget.  The Village has been extremely fortunate from 2005 through 2007 to have had actual revenues exceed expenditures and, therefore, have not had to dip into these “rainy day funds”.  Should actual expenditures exceed revenues in the future, the Village will have to seriously look at identifying an additional recurring revenue source to shore up any operating deficit.

Revenues
Expenditures
Major Initiatives
Conclusion

A key part of the proposed financial plan is the development of a revenue structure that is both sound and diversified.  Revenue diversification is a concept that the Village has successfully followed for the past fourteen years.  This practice has afforded a “no property tax increase” theme to be proclaimed over most of this timeframe.  A growing tax base, increasing property values and the institution of alterative revenues (i.e., real estate transfer tax, infrastructure maintenance fee, cable franchise fees, local option sales tax and tower antennae leases) have all helped to lower the overall Village property tax rate from $1.54 to $0.976.

Following are highlights of the more material 2008 budgeted revenues:

·               State Per Capita Revenues – Since 2004, performance of this revenue source has improved dramatically due to the strengthened economy and the special census in 2005 that increased Streamwood’s population from 36,407 to 39,217.  Based on information provided to us by the Illinois Municipal League, we have budgeted $3,595,000, or $91 per capita, for 2008.  This is a 60% increase over the $2,236,994 income tax revenue the Village received in 2003.

·               Property Taxes – For the 2007 levy (to be paid by taxpayers in 2008), the Village intends to request $7,975,658 in property taxes.   This levy request follows the ongoing popular theme of “no property tax increase” when comparing the current tax levy to the previous year’s tax extension.   Since 2007 is a tri-annual reassessment year, it is anticipated that the Village’s 2007 property tax rate will decrease from $0.976 per $100 of equalized assessed valuation to $0.911.  This tax levy plan continues to comply with the Village Board’s current financial management revenue policy that sets a self-imposed maximum tax rate of $1.30.

·               Water and Sewer Fees – A four year water and sewer rate increase plan began with the 2006 Budget.  2008 will be the third year of this plan and will see rates increase 5%.  The Village had last raised water and sewer rates back in 1996.  Water usage has not materially increased due to wet weather patterns and overall conservation measures instituted by our water customers.  In addition, Lake Michigan water costs have continued to soar since the City of Chicago began implementing regular annual rate increases.  We have just learned that Chicago intends to raise rates 15% annually over the next three years.  This action will no doubt have an impact on future rates that are assessed against Village of Streamwood water users.

·               Sales Tax – This revenue source has been under some recent pressure due to the economy.  Our highest sales tax producing businesses (Target, Walmart, Sam’s Club, Jewel/Osco and Value City) are not expected to see major sales growth in 2008.  Uncertainty also remains over the long-term impact of how untaxed Internet sales will affect local merchandise sales.  Because of these facts, the 2008 Budget anticipates that sales taxes will be $3.675 million, only 0.1% higher than the 2007 Budget. 

·               Building Related Taxes and Fees – Since the availability of open space within the Village is decreasing, it is inevitable that one-time building related revenues will fall off in future years.  The 2008 Budget for many of these line items have been adjusted accordingly.

·               Vehicle Impound Fees – The Police Department anticipates 800 vehicles will be impounded annually for designated offenses (DUI, driving with revoked license, felony drug arrest).  A new fee of $500 per tow will be assessed each offender generating an estimated $400,000 in revenue.  Costs to administer the program will include an additional police services clerk and a part-time contracted attorney to be a designated hearing officer.

·               Pension Fund Investment Returns – The Police and Fire Pension Funds’ investment yield for 2006 were 9.4% and 9.1% respectively.  These yields are slightly above our actuarial assumptions which use 7.5% as the rate of return factor.