Chronology

May 7, 2007: The public is first made aware, during a discussion of the FY2008 (current) budget, of potential budget problems arising from several factors:

An average of 40% fewer homes built in 2006 than in each of the three preceeding years

20 new city employees added to the payroll since 2002

Rising fuel costs

Large insurance claims filed

NOTE: Many of the positions added, especially those in the Community Development department, were funded through building-related permit fees — a practice prohibited by the Illinois State Constitution. (See Article VII, Section 9.)

December 10, 2007: DeKalb announces a shortfall of $550,000 in the current budget due to revenue shortfalls in the areas of sales taxes, permits and fees. Council unanimously raises fines for parking along snow routes from $25-$75 to $75-$150 and begins discussing the development of a chronic nuisance property ordinance aimed at fining landlords with tenants who repeatedly violate city laws.

January 14, 2008: Following an earlier announcement that up to 20 city employees could be laid off to ease the budget shortfall, the Council meeting is packed with American Federation of State, County and Municipal Employees (AFSCME) and their families. AFSCME Local 813 President Mike Taylor asks, “How can six months go by without costs being addressed? Several questions have been brought up, such as who is accountable, and why approve a tax levy value that hasn’t changed in 10 years to cover costs of expenditures?”

Council does not discuss the tax levy.

It is reported that 80% of the city’s general fund budget is spent on personnel.

January 27, 2008: Daily Chronicle reports that both AFSCME Local 813 and the city have held internal discussions about the budget deficit but have not yet met together with formal proposals to address it. The assistant city manager reports that the shortfall was “noticed” as early as March 2007, that city council members were informed in public budget meetings May 2007 and that water service rates were raised for the first time in five years; but that no other actions were taken until a December 2007 audit because the city did not want to “overreact.”

January 28, 2008: Local union leaders address DeKalb City Council in defense of jobs, saying they’d like to offer alternatives to layoffs to balance the budget. Afterward, they express frustration to local press that the city has not been forthcoming with records they need for developing these alternatives. Also after the meeting, the city manager reveals that the police and fire departments will see cuts in their departments in August if the proposed layoffs do not balance the budget.

February 11, 2008: It is announced that the city and union representatives have reached an agreement that avoids layoffs, a combination of five voluntary retirements and five positions eliminated throught attrition mixed with plans for tax and fee increases. Council approves the retirement packages. The rest of the plan, still under negotiation, will be presented to Council early next month.

March 4, 2008: Council approves a measure to address the projected budget shortfall that includes five unpaid furlough days for each employee. Certain parts of the plan, such as increases to sales tax, creation of a gasoline tax, and hikes to fees for water, natural gas and electricity will be addressed in upcoming sessions.

One of the biggest contributors to the 2007 budget shortfall was a drop in expected sales tax revenue of $225,000, [Assistant City Manager Rudy] Espiritu said. Sales tax accounts for 40 percent of revenue for the general fund. In addition, the city also collected less revenue from construction projects through zoning and permit fees, Espiritu said. DeKalb added 20 new employees over the last five years with increased revenue created by economic growth in the city – including developments along Sycamore Road.

“It was good while it lasted, but it’s done and done for a while,” Espiritu said.

Expenditures are projected to increase 6.3 percent over the next five years while revenue is expected to increase only 3.14 percent, Espiritu said.

March 24, 2008: Council votes 6-0 (with Alderman Baker absent) to raise the city sales tax from 7.5% to 8% and impose a gasoline tax of .02 per gallon despite protests from residents and local, independent gas station owners.

“There are no tax-and-spend people up here,” 1st Ward Alderman Bertrand Simpson said. “If we are in place to vote in favor of this, there’s a good reason.”

DeKalb resident Mac MacIntyre criticized city staff for not communicating enough with residents before the council vote, while acknowledging 5th Ward Alderman Ron Naylor for meeting with constituents and 3rd Ward Alderman Victor Wogen for appearing on radio to talk about the taxes.

MacIntyre claimed that neighboring communities saw a sharper jump in lumber sales than DeKalb did after the city enacted a sales tax increase in 2003.

“Buy some time. Use an economic stimulus package,” MacIntyre said. “It doesn’t always have to be a tax increase.”

Three budget workshops open to resident input are scheduled for May 19, 20 and 21.

April 14, 2008: Reconsideration of the recent gas tax imposition and sales tax hike are on the agenda in response to resident input at an informal meeting with Alds. Wogen and Keller.

“It became apparent that a variety of procedural errors were conducted,” Keller said before Monday’s vote. “For the sake of public trust that we are open and inclusive, we should entertain a reconsideration of this now.”

While business owners and residents said Monday that the tax measures will drive sales from the city, a union representative and aldermen said the city cannot afford to lessen city services, even in a struggling economy. Later in the evening, the council voted 7-0 to review the taxes in late August and decide then whether to keep them through 2009.

DeKalb resident Mark Charvat criticized the council for approving the taxes 20 days after they were first proposed and said the council has never voted to cut taxes after they had been raised.

Alds. Povlsen, Wogen, Gorski and Naylor voted to keep the taxes. Alds. Simpson, Baker and Keller voted against, i.e. to reconsider.

An ordinance that allows an increase in water capital fees was also passed at the meeting.

For more details of this very long meeting, see here also.