DeKALB – A draft of DeKalb’s financial plan for 2022-2024 was unveiled at a special joint meeting with City Council and the Finance Advisory Committee on March 14 at the DeKalb Public Library, 309 Oak St.
The plan was presented by City Manager Bill Nicklas and Chief Financial Officer Carrie Dittman and focused on the financial aspect of improving life in DeKalb.
“We have to stick, as best we can, to some fiscal prudence,” Nicklas said. “We will continue to build on the economic development that has fortunately flourished in our community here, over the past three years in particular, and we will try to be forward thinking about the future.
This desire led to the creation of a three-year plan; however, the plan is still in its early stages and should be tightened once city tax numbers become available in about 30 days, Nicklas said.
“That means what we’re talking about is a best guess,” Nicklas said. “We think it’s pretty tight, but there could be surprises. There will be refreshment to be done to bring more real data to the ground.
CURRENT FINANCIAL SITUATION
After Nicklas presented the plan, Dittman discussed the general operations of it, including ley revenue from property taxes, sales taxes, and fines. Property taxes and sales taxes are particularly important and are the largest sources, Dittman said.
It is expected that in 2021, $6,522,456 was raised in property taxes while $16,554,942 was raised in sales taxes, according to the bill. financial plan.
Another significant income is $10,422,954 from US Bailout Act. Given in two installments, the town of DeKalb received half the money last year and will receive the rest in a few months, Dittman said. The money must be committed by the end of 2024 and spent by the end of 2026 and can be spent on almost anything except in circumstances such as legal settlements and rainy day funds .
So far, the money has been used to rehire public safety personnel, replace lead pipes and relocate tenants.
The city also expects its revenue to increase over the next three years due to new developments as the tax rate decreases.
“We actually earn more in property taxes while residents and businesses pay less,” Dittman said.
FINANCIAL TRAPS AND OTHER CONCERNS
One program that eats up a good chunk of the city’s revenue is the police and fire department pensions, which were funded locally through property taxes; however, new legislation has been passed where a statewide board will control pensions.
“In the meantime, we can’t do anything other than fund the actuary, which keeps getting bigger every year,” Dittman said.
Nicklas compared the soon-to-be-shrinking plan to the man-eating plant Audrey II from the musical “Little Shop of Horrors,” which keeps getting bigger the more it consumes.
“If this continues unabated, we’ll be in deep trouble in three to four years,” Nicklas said.
Other challenges include a declining population. As the population has fallen from 44,000 to 40,000 over the past 10 years, income tax revenues have also declined.
However, the good news is that since the budget was budgeted conservatively, it shouldn’t affect much, Dittman said.
Nicklas also pointed out challenges to the plan that could hamper its success.
“We are struggling, although not as much as in 2017 and 2018, to find enough money on an annual basis to meet the street repair costs which increase every year,” Nicklas said.
The city is close to reaching the goal of enough money to repair the roads in the summer, but more needs to be raised.
“Identifying a problem is one part of it and solving it is another,” Nicklas said.
PROBLEM SOLVING AND THE FUTURE
Currently, DeKalb needs $600,000 for street maintenance and $215,000 for fleet replacement, according to the financial plan. All to keep pace with the deterioration of the streets. Possible sources of revenue that Nicklas did not recommend included increased property taxes, gasoline, and sales.
One solution Nicklas proposed in the plan was to use the cannabis tax as a possible source of future revenue for the city.
“We currently don’t have a dispensary in town,” Nicklas said.
In the first year of establishment, a dispensary could earn between $200,000 and $400,000 in revenue for the city, Nicklas said.
“If we had two (dispensaries), that would pretty much close the gap,” Nicklas said.
Nicklas also raised the possibility of increased federal aid through passage of the federal infrastructure bill that the Biden administration signed into law in November.
The bill could generate about $949,000 for DeKalb, but it will be distributed differently than the American Rescue Plan Act. The city should apply for grants and there are no guarantees. However, the funds could be available next year.
As for summer repairs in the city budget, Nicklas said “we have a little slack but not a lot.”
After the plan was unveiled, Nicklas recommended that the city council and finance advisory committee meet again after the 2021 fiscal year audit.