Town of Normal financial planners said in a report to the town council that fiscal trends are largely positive or stable with only a couple areas of worry. Mayor Chris Koos acknowledged one of those is mandated fire and police pension contributions.
"You know, we may have to go into the general fund this year to make our pension obligation for the coming year," Koos said Wednesday on WGLT's Sound Ideas.
Koos said the town has not yet made that decision. Historically, property taxes have funded pension contributions, not sales tax money from the general fund. Property values in the town are projected to rise 0.6%, yet required fire and police pension contributions will rise 7% and 11.8%, respectively, in the most recent year included in the report.
Another area to pay attention to is utility tax revenue that has dropped in eight of the last 10 years.
"One of our biggest producers historically had been land line telephones, and people aren't using those any more. People's houses are more efficient, so they are using less natural gas or electricity. Our water usage is down. And we expect that trend to continue," said Koos.
The arrival of streaming video also has eaten into the cable TV subscriber base, another utility revenue source. Koos said the town will have to find a replacement for those declining revenue steams.
Koos said another area of concern is medical costs. He said health and dental cost increases will likely even out because the current increase has come from deferred treatments and procedures during the pandemic that town workers are now scheduling with physicians.
He said more problematic is skyrocketing prescription drug costs. Koos said there is talk at the federal level about action to require drug companies to negotiate rates with Medicare as it does with the Veterans Administration. He said that could curb cost increases for town retirees.
Koos said even with the pandemic, town finances look pretty good in most categories. He said the town had a budget surplus this year it did not expect as federal aid and various categories exceeded pandemic-driven projections.
Sales tax receipts, for instance, have risen 5.8% to $16.68 million, above pre-pandemic levels, according to the report. Part of that is pandemic rebound, but staff said another element is "Leveling the Playing Field" legislation enacted as of January that changed sales tax rules for items purchased online. There is, however, a two-year drop in sales and beverage tax receipts — down by $500,000 in that pandemic period.
The county labor force is an area of concern, Koos acknowledged. The retirement of baby boomers and communitywide hiring patterns by businesses have resulted in a five-year workforce decline, made more pointed in the last two years by the pandemic.
Staff said the trend indicated a lack of growth, though they expressed hope recent economic development associated with Rivian will improve the county's workforce numbers.
Workforce numbers by year:
- 2011 - 95,760
- 2012 - 94,936
- 2013 - 92,706
- 2014 - 91,152
- 2015 - 91,406
- 2016 - 90,907
- 2017 - 89,431
- 2018 - 89,230
- 2019 - 88,256
- 2020 - 85,103
Unemployment rates, construction permits, and average home prices are all viewed as positive indicators for the town. So is property value; even those are estimated to rise .6% in 2021. And that is far less than the 2% increase town planners hope for to balance natural price increases. Overlapping debt as a percentage of assessed value decreased as did the long-term debt balance. Water and sewer funds are in a strong position, according to the report.
