Municipal budgeting was the topic of a symposium delivered by Pat Segel, the human resources manager for the village of Berwyn, in the basement of St. Peter’s Evangelical Lutheran Church last week.
“You cannot understand your city unless you understand how it’s financed,” Segel told an audience of about 15 persons.
The event was, by and large, an educational speech on municipal finance, and Segel opened by explaining where municipal revenue comes from: bonds, sales tax, real-estate tax, grants, etc.
Her speech lasted two hours and eventually segued into an amalgam of topics, ranging from the non-transparent and non-formulaic process of certain agencies’ bond rating, the difficulty that some financially strapped local municipalities have had in bargaining union contracts, and the problems surrounding Tax Increment Financing (TIF) districts that raise lucrative amounts of property-tax dollars but do not generate development, to name just a few.
Segel explained that rating agencies often do not disclose how they assign scores to municipalities, so the parameters are ill-understood and seemingly non-methodical. At the end of last year, two kinds of the village’s municipal bonds were slightly downgraded because of a pattern of decreased revenue over the last two years. The village currently owes $15.3 million in bond debt, but its ratings are still in relatively good standing. Mayor Anthony Calderone has said that the minimal downgrade will only affect the village’s purse if it chooses to sell additional bonds in the future and that the village has no plans to do so.
Segel mentioned the back-and-forth process of bargaining on union contracts that the Berwyn often undergoes. She also pointed out that, based on an audit of Forest Park’s federal grant projects, there was no review of money paid to contractors. Because no one approved the payment of contracts, the village could have been overcharged, she said; fortunately, it was not.
TIF districts are areas where a portion of property taxes are siphoned into an account to be used to develop blighted areas, based on state law. According to Village Administrator Tim Gillian, Forest Park has four TIF funds with pots of money that range from $1 million to $2 million. One of those funds, the Harlem and Harrison district, currently has no money.
Segel urged audience members to get involved in how local government spends the public’s money. If the village does not turn over financial information, file a Freedom of Information Act request, she said.
Segel briefly touched on Forest Park’s fiscal year 2010 finances and referred to an FY ’10 audit to exemplify points she discussed.
In FY ’10 the village finished with a $203,000 surplus, but revenues fell short of estimates by $1 million. Village officials have said they expect a nearly $400,000 surplus at the end of FY ’11, which expired on April 30. Those figures have not been published yet.
A portion of the audit was available for audience members, and Village Finance Director Judy Kovacs attended the meeting and also partook in answering many of the audience members’ questions.
“Forest Park is in the same position that all municipalities are: less revenue; more expense[s] that eventually will require more innovative, cost-effective, efficient service delivery in the future,” Segel wrote in a packet that was distributed to the audience.
She was invited to speak by Jerry Webster, president of Citizens United in Forest Park (CUinFP), a local nonprofit group of community activists. The two met at a meeting hosted by Citizens Advocacy Center, an Elmhurst organization similar to CUinFP.
