A combination of budget cuts, tax increases and delayed capital improvements could help replenish reserve funds that have dropped over several years, a village official said Tuesday.
Trustees recently approved a 2003-04 budget with a $5.1 million deficit, and Village Manager Ken Fritz told them Tuesday that cash reserves, at $22 million in 2000, would be depleted by 2008 if the economy does not rebound and village spending is not curbed.
Village expenses could outpace revenue over the next five years, in spite of a half-percentage point sales tax increase that goes into effect Jan. 1, he said. Schaumburg is susceptible to dramatic income swings because of its reliance on sales taxes.
He said trustees must follow through with a hiring freeze, cutting the town’s vehicle fleet and delaying some capital projects. They must also find another $1.25 million in permanent reductions.
His proposal, which includes an assumption of revenue increases of 3 percent per year, would bring the budgetary reserves back to $21.6 million in 2007.
Fritz initially urged the board to delay building the $300 million convention and fine arts center because $3.1 million to $4.4 million would be needed annually to operate the complex until revenue supported its operations.
But trustees disagreed and said they must move forward with the complex so it can generate revenue as soon as possible.
“The convention center and hotel–that’s our future revenue source and it is what will continue to fund the services our residents enjoy,” said Trustee Tom Dailly. “With construction costs down, I don’t think there’s a better time to build.”
About $40 million has been spent on the project and grading is to begin in April.
The committee approved a recommendation to adopt Fritz’s proposal without delaying the convention center project and directed Fritz to draft the necessary ordinances to increase the hotel-motel and telecommunications taxes. They also asked Fritz to look into the possibility of an entertainment surcharge for ticket sales throughout the village and to explore other more stable forms of revenue.
The Village Board is expected to vote on the measures Tuesday.
