Village officials are blaming the weakened economy for a $1.7 million deficit that has the municipal ledgers swimming in red ink.

According to a report summarizing Forest Park’s fiscal health at the close of the budget year on April 30, the village overspent its means by $1,747,358. That news was delivered to council members during their meeting on Monday, but was tempered somewhat by speculation that state tax receipts will shrink that figure.

“The most recent projections, and they are just projections, show us looking at a loss of about $700,000,” Commissioner of Accounts and Finance Rory Hoskins said.

Should that scenario play out, Forest Park will still see a year over year explosion in its debt. Fiscal year 2007 came to a close with a shortfall of about $84,000.

“When we passed this budget last July no one was really talking about a recession or the kind of slow growth, the extremely stagnant growth that we’ve seen since about Thanksgiving or Christmas,” Hoskins said. “We found several key areas where sales tax receipts just have not come in as expected. We’re down about $200,000 or $250,000 or so from what we expected in terms of sales tax.”

Forest Park has received slightly more than 70 percent of the $5.1 million in state tax money that was expected, according to the report submitted at the May 12 meeting. At this time last year, village officials had received roughly 86 percent of what was anticipated, and ultimately took in roughly $600,000 in unanticipated state tax revenues.

For 2008 Forest Park also collected about $300,000 less in fines that it had projected, said Village Administrator Mike Sturino.

“The revenues haven’t been where we needed them,” Sturino said. “A big part of that is sales tax revenue that didn’t materialize.”

In hindsight, Hoskins described the revenue projections for the fiscal year as “a little bit rosy.”

Not helping matters is a depleted cash reserve that’s insufficient to cover even 45 days worth of expenses. The balance in this fund as of April 30 represents a nearly 16 percent drop over last year, however, when pass-through grant revenues are taken out of the equation the village’s available cash can support 1.6 months worth of expenses, according to the council’s report. Some $3 million in anticipated grant funding was never received.

But the village is not in dire straits, according to Sturino.

Because Forest Park was able to reduce its liabilities by roughly $1 million over the fiscal year, the amount of available working capital is actually up about 9 percent compared to one year ago. The village has some $1.5 million in working capital.

“We’re not in any crisis situation right now,” Sturino said. “I’d always like more working cash.”

The village council is planning on a tighter operating budget for the new fiscal year. Hoskins said he recently met with Sturino and Finance Director Judy Kovacs to trim about $1.2 million from the latest round of budget requests submitted by department heads. The council has not yet been presented with a fiscal year 2009 budget.

“We’ve limited overtime to the extent that we could,” Hoskins said of the upcoming budget proposal. “We’ve put off the purchase of vehicles and instead chose to lease for another year. We have decided not to make some cosmetic street improvements” nor will the village purchase new furniture and other such items.