Citizens to feel impact of cuts in Champaign city budget

CHAMPAIGN — The proposed city budget for the fiscal year starting July 1 has a line item that is easy to overlook but is worthy of attention.

The fiscal year 2010 budget, released Tuesday, projects spending in the general operating fund, the city´s main account, of $67.5 million.

That´s $2.3 million less in spending than was budgeted for the current fiscal year, and $900,000 less than the city actual expects to spend this year — after the city implemented a hiring freeze and other cost-saving measures last fall.

Reductions in city spending don´t come easily, according to city Finance Director Richard Schnuer. He said the city needs revenue growth of 5 percent annually just to stay even in terms of numbers of employees.

To get a reduction in spending this coming fiscal year, the city has not filled about 20 vacant positions and, through expected retirements, eventually expects to reduce full-time equivalent employees by 25.

Schnuer said the problem with this upcoming budget is a familiar one to a lot of households — not enough money.

The recession is causing people to spend less, both locally and statewide, and that lack of spending is hurting the city´s bottom line.

“The immediate problem is the revenues,” he said.

By far, the city´s biggest revenue source, sales taxes, are expected to stay flat for the third year in a row at $30.5 million.

Schnuer said the city was seeing decent growth in sales tax receipts until this fall, when the stock market rapidly declined and the economy weakened. Since then, sales tax receipts for the fall and winter months have been down by 2 to 6 percent compared with a year earlier. Receipts of sales taxes from the state typically lag collection by two months.

State income tax dollars the city receives are expected to decline by 3 percent, to $6.8 million, in fiscal 2010. Personal property replacement taxes are projected to drop 13 percent to $831,000.

Most other income sources are expected to stay flat or slightly increase. Property taxes are one bright spot for the city, with income projected to increase $1.3 million to $22.5 million.

The weak revenue projections are one reason Schnuer is asking the city council to approve a variety of fee increases this spring to generate an additional $1 million in fiscal 2010, including increases in the cable franchise fee, implementing a new vehicle impoundment fee and increases in development fees.

By The News-Gazette

The graph below shows revenue sources for the City of Champaign's fiscal 2009-2010 budget

Source: The City of Champaign