The Wellington Village Council approved its tax rate, budget and capital improvement plan for the 2017-18 fiscal year on Tuesday, Sept. 12 after the village’s first public hearing.
The total budget proposed is $110.5 million, including transfers, and is an overall increase of approximately $21 million from the current year’s budget of $89.5 million.
“Please remember that the Acme Improvement District water and wastewater, solid waste and the Lake Wellington Professional Centre budgets were adopted on Aug. 8,” Director of Administrative & Financial Services Tanya Quickel said. “The operating budget includes the preliminary millage rate of 2.43 mills, which is a decrease of .01 from the current rate of 2.44 mills.”
Quickel said the increase in the budget shows that the village is using its reserves for projects instead of increasing the millage rate.
The largest fund increase is revenue from the new countywide sales surtax program.
“We have budgeted $3.5 million in anticipated revenue from that,” Quickel said.
But the majority of the increased spending is in the utility department.
“We set the rate structure so that we can pay as you go,” Village Manager Paul Schofield said. “We’re not spending $19 million we don’t have, and there is $14 million or so coming out of the utility fund. It is actually there, funded for projects, and we’re getting ready to do a new rate structure. The reason we put the money in place up front rather than borrow it is if we pay as we go, we pay the actual cost of the project.”
If the village borrowed the money for the projects, it would borrow it over 20 years or more, Schofield said. With the cost to borrow approximately $100,000 a year, he said, the village would end up paying back much more during the course of the loan.
“Many years ago, the council made provisions to get as much as we can done paying as we go, so these monies are coming out of utilities; they’re coming out of buildings; and they’re coming out of Acme,” Schofield said. “They’re coming out of places where the reserves will build and potentially pay for construction projects. There is no wild spending here.”
Schofield said he doesn’t want the spending to alarm residents.
“When you look at what the actual increase out of those capital projects are, the increase is from about $89 million to $91 million, and it’s actually the increase that basically accounts for the cost of inflation,” Schofield said. “I want to be very clear about this so residents don’t think we were wildly or recklessly spending down reserves.”
Vice Mayor John McGovern defined the actions the village continues to implement in a nutshell.
“Essentially, we saved this money, and now we are spending it,” he said.
There is $8.2 million in governmental capital projects.
“It’s divided between our ongoing programs between parks, safe neighborhoods, streetscapes and Acme. Then there’s our one-time projects — tennis center parking, the new computer system, and the South Shore and Pierson intersection. Then we have the sales surtax, where we’ve included the Community Park renovation and Village Park upgrades,” Schofield said.
This year, there is $18 million in utility capital projects.
“Including this, with what we had budgeted for utilities this year, you’ll have approximately $45 million in capital projects in the utility department itself,” Quickel said.
The proposed tax rate for the upcoming fiscal year remains at 2.43 mills. For a homesteaded property, that will cause approximately a $15 increase on the tax bill, Quickel said.
“That is because of the average property value increase,” she said. “For a non-homesteaded property, you’re looking for an approximate $50 increase, and that’s on an average home value of $371,500.”
McGovern wanted to make it clear where the $21 million increase in this year’s budget was coming from and why.
“Eighteen million of it is the capital projects and utility fund,” Quickel said. “And then, $3.5 million is your sales surtax money, so basically that’s your $21 million.”
Councilman Michael Napoleone followed up, asking if that meant that the fiscal year budget for 2018-19 would see a decrease to a total more consistent with years past because of one-time expenditures this year.
“The surtax is there for 10 years, so you’ll see that $3.5 million for 10 years, and it’s going into the capital, so it doesn’t go into normal operating,” Schofield said. “The utilities will drop for a long time until we get the funding for the next major project. At some point, you’re going to see $15 million to $25 million in the utility, but that money will be in there, and it will be in the savings account to pay for the next planned expansion.”
Both Quickel and Schofield also confirmed that the budget is going to see a decrease following this year’s finalized budget.
“The utility expenditure, we fund that one time. It’s out next year,” Schofield said. “We’ll be dropping $14 to $15 million in that alone, and I think that number may be as high as $18 million.”
McGovern noted these were expenditures set in place years ago to update the village’s utility system.
“This is the expenditure of dedicated funds that have been accumulated to ensure that we have the quality utility services that our residents have come to expect,” McGovern said.
Napoleone made a motion to approve the first reading of the 2017-18 tax rate, budget adoption and capital improvement plan, seconded by Councilman Michael Drahos. The motion passed unanimously.