2023-06-05 - Village Board Committee of the Whole - Agenda Packet2. Special Business
A. Proclamation Honoring Belmont Village Senior Living's Twentieth Anniversary (President
Smith) (Staff Contact: Evan Michel)
B. Strategic Planning Update and Next Steps Presentation (President Smith) (Staff
Contact: Evan Michel)
C. 2023 20-Year Water Pro -Forma (Trustee Smith) (Staff Contact: Chris Black)
D. 2023 5-Year General Fund Forecast (Trustee Pike) (Staff Contact: Chris Black)
3. Public Comment
Public Comment is limited to items that are not on the regular agenda. In accordance with
Section 2.02.070 of the Municipal Code, discussion on questions from the audience will be limited
to 5 minutes and should be limited to concerns or comments regarding issues that are relevant to
Village Board business. All members of the public addressing the Village Board shall maintain
proper decorum and refrain from making disrespectful remarks or comments relating to
individuals. Speakers shall use every attempt to not be repetitive of points that have been made
by others. The Village Board may refer any matter of public comment to the Village Manager,
Village staff or an appropriate agency for review.
4. Adjournment
The Village Board will make every effort to accommodate all items on the agenda by 10:30 p.m.
The Board, does, however, reserve the right to defer consideration of matters to another meeting
should the discussion run past 10:30 p.m.
The Village of Buffalo Grove, in compliance with the Americans with Disabilities Act, requests that
persons with disabilities, who require certain accommodations to allow them to observe and/or
participate in this meeting or have questions about the accessibility of the meeting or facilities,
contact the ADA Coordinator at 459-2525 to allow the Village to make reasonable
accommodations for those persons.
2.A
Information Item : Proclamation Honoring Belmont Village Senior
Living's Twentieth Anniversary
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Recommendation of Action pp
ll
Staff recommends proclamation.
A proclamation honoring Belmont Village Senior Living's twentieth anniversary.
ATTACHMENTS:
• Belmont Proc 23 (DOC)
Trustee Liaison
Smith
Monday, June 5, 2023
Staff Contact
Evan C Michel, Office of the Village Manager
Updated: 6/1/2023 2:27 PM
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Village of Buffalo Grove
PROCLAMATION HONORING BELMONT VILLAGE SENIOR LIVING'S
TWENTIETH ANNIVERSARY
WHEREAS, Belmont Village Senior Living has faithfully served the Buffalo Grove community
and beyond for nearly 20 years; and
WHEREAS, Belmont Village has steadily grown its reputation through award -winning
programs, hospitality, and care in the Chicagoland area, contributing notably to the assisted
living and memory care services; and
WHEREAS, Belmont Village was recognized for its outstanding memory care program,
particularly the Circle of Friends initiative for Mild Cognitive Impairment (MCI), showcasing
their commitment to the wellbeing and quality of life for seniors; and
WHEREAS, Belmont Village has been instrumental in co -hosting the Buffalo Grove Memory
Cafe, a crucial initiative providing a safe and welcoming place for those with dementia and their
caregivers to socially gather and connect with others through conversation, arts, music, and
refreshments. This free program is a testament to Belmont Village's unwavering dedication to
their residents and community, and their belief in the power of shared experiences in fostering
support and understanding; and
WHEREAS, Belmont Village, now marking its 20th year, continues to leave a lasting impact on
the community of Buffalo Grove, the State of Illinois, and the field of senior living and care.
NOW, THEREFORE, BE IT PROCLAIMED, that I, Eric Smith, President of the Village of
Buffalo Grove, in concurrence with the Village Board, do hereby express our gratitude to
Belmont Village Senior Living for its exceptional service to the Buffalo Grove community and
beyond.
Proclaimed this 5t" day of June 2023.
Eric Smith
Village President
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2.B
Information Item : Strategic Planning Update and Next Steps
Presentation
........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Recommendation of Action pp
ll
Staff recommends presentation.
The Village has engaged the services of Lyle Sumek Associates, Inc. to guide the strategic planning
process. The core objective is the creation of a comprehensive Strategic Plan to assist the Village Board
and staff in policy prioritization, action sequencing, and initiative identification for the next five years while
defining a long-term vision. Staff will provide an update on the status of the project, results of the Citizen
Summit, and next steps.
ATTACHMENTS:
• BOT Memo (DOCX)
• Attachment A (PDF)
• Attachment B (PDF)
Trustee Liaison
Smith
Monday, June 5, 2023
Staff Contact
Evan C Michel, Office of the Village Manager
Updated: 6/1/2023 12:20 PM
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VILILMN'T OF
R_' ITAL0 G'ROV E
MEMORANDUM
DATE: June 1, 2023
TO: Dane Bragg, Village Manager
FROM: Evan Michel, Assistant to the Village Manager
SUBJECT: Strategic Planning Update and Next Steps
BACKGROUND
IN
The Village has engaged the services of Lyle Sumek Associates, Inc. to guide the strategic
planning process. The core objective is the creation of a comprehensive Strategic Plan to assist
the Village Board and staff in policy prioritization, action sequencing, and initiative
identification for the next five years while defining a long-term vision.
WR.r i II' ]/ I SSit N AND _']Il S llW S"I'A.'fill' E l i,: S
Lyle Sumek Associates have developed preliminary mission and vision statements. These are
drawn from a diverse set of inputs, including interviews with each elected official, a
collaborative session with Village staff, and two interactive sessions with the Village Board.
These statements are accessible in Attachment to this memorandum.
f;lTIDI: BEN SU M M I'l".A N1) (1)M M U1NI l" ' EN("11111A 54',NI14.;15"L.,
On May 11, 2023, the Alcott Center hosted the Strategic Planning Citizen Summit. This forum
convened a select group of residents identified by the Village Board and staff for their
commitment to the community. These participants shared their visions and feedback on Buffalo
Grove's prospective future.
Elected officials and Senior Staff suggested 144 community members who offered unique
perspectives on Buffalo Grove. Invitations were sent to these individuals during the week of
April 24th, requesting RSVPs by May 8, 2023. A total of fifty-seven responses were received,
with thirty-seven confirmations of attendance.
The summit had active participation from thirty-four community members. Participants were
divided into seven groups, each facilitated by a staff member and an elected official or senior
staff member. The discussion was structured into three rounds, each exploring a different facet of
Buffalo Grove's future. Specific questions and commonly identified themes are outlined in
Attachment B to this memorandum.
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EXT S'1 11:[11S
The key insights and common themes derived from the Citizen Summit are currently being
integrated with the other Moving BG Forward initiatives to enhance community outreach.
In the coming months of June and July, Lyle Sumek Associates, in collaboration with staff, plan
to engage with a chosen group from the summit invitee list for additional discussions. These
conversations are designed to clarify the relationships between aspirational aspects of the
proposed mission/vision statements and the themes identified at the Citizen Summit.
After these discussions, Lyle Sumek Associates will prepare initial reports for review by the
staff. A final workshop will then be scheduled with the Village Board to fine-tune and finalize
the Strategic Plan. This workshop is tentatively set for late August, with the formal adoption of
the strategic plan slated for the October 16th Village Board Meeting.
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Summit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
I 2.B.b I
BUFFALO GROVE
VISION 2038
[Initial Ideas]
BUFFALO GROVE 2038 is a
SAFE C:: U i"IlY (i), "I'IFUL COMMUNITY(2) and
i i I! "I11 .1 IJ l i1'"II "° (: )
BUFFALO GROVE 2038 is a
COMMUNITY WDTI TST ICI G PUBLIC S I LS (4)
COMMUNITY P � " RE - .'JIII.1 . EIGBOIII lI.. IS (5)
COMMIJNFry OF I..,EISI.TR1 EXPERIENCES(6) and
C . M.MI:I.J i"1II7Y IIII"i"iI A. S'TI ONG N. .D.I ERSE I"I. Ci:..
;CI:. NOIII ' (7)
BUFFALO GROVE 2038 is
E INCLUSIVE I: WEIXOMING COMMUNITY(8)
BUFFALO GROVE 2038 is A SPECIAL COMMUNITY!
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Community Summit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
BUFFALO GROVE
VILLAGE GOVERNMENT MISSION
[Initial Ideas}
OUR VILLAGE GOVERNMENT MISSION
is to act in a
as we provide
OUTSTANDING MUNICIPAL SERVICES () and
PLAN AND INVEST IN THE FUTURE, (3)
OUR VILLAGE GOVERNMENT is
HIGH H PERFORMING ILL E TEAM (4) and
OUR VILLAGE GOVERNMENT
BUILDS OUR BUFFALO GROVE COMMUNITY. (7)
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
A Question 1:
What your reasons for making the choice to
live in the Village of Buffalo Grove — our
community's strengths and assets?
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
Top Reasons to Live in Buffalo Grove
Our Community's Strengths and Assets:
Discussion Teams
► Common Themes
1. Quality of Schools
2. Safe Community
3. Great Parks and Open Spaces
4. Location: Near Shopping and Proximity to Chicago
5. Sense of Community: Our Events/Festivals, Opportunities to Get Involved
6. Inclusive, Diverse Community: Welcoming and ???
7. Village Government: Financially Responsible, High Level of Services
8. Recreational Programming for All
9. People Care about Each Other
10. Affordable Starter Homes
11. Family Friendly Community: Great Place to Raise your Children
12. Community Partnership: Governments Collaborating and Working Together
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
B Question 2:
What actions could the Village take to
enhance your quality of life in Buffalo
Grove — our community's areas for
improvement?
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
Actions to Enhance your Quality of Life —
Our Community's Areas for Improvement:
Common Themes
► Common Themes
1. More Restaurants: Boutique, High Quality
2. Redevelopment Areas: Empty Buildings, Upgrade/New Buildings
3. More Housing Diversity: Downsizing Options, Affordable Senior Housing
4. Mobility Options: Public Transportation, Walking
5. More Entertainment Options: Adults and Seniors
6. Clove Development: Community Activity Center/District and Destination
7. More Retail Shopping Opportunities:
8. Promotion of Buffalo Grove Community Assets
9. More and Diverse Recreational Programs/ Park Amenities: Pickle Ball, Pitch,
Cricket, Senior Center, Youth Activities
10. EV Charging Stations
II. Young People Staying in Buffalo Grove
12. Sidewalks: Enforcement od Ordinances
13. Road Improvements
14. Festivals: Food Trucks
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
A Question 3:
Great Neighborhoods — what does that mean
and what are future opportunities?
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
Great Neighborhoods —
Definition and Future Opportunities:
Common Themes
► Common Themes
1. Neighborhood Connectivity: Biking and Walking
2. Beautiful Neighborhood: Well -Maintained Properties/Homes, Aesthetics
3. Neighbors Coming Together: Meeting Each Other, Block Parties, Opportunities
to Interact
4. Neighborhood Communications: Publicizing Activities, Amenities
5. Quality and Diverse Housing
6. Safe Neighborhoods: Neighbors Feeling and Are Safe
7. Green Infrastructure: Neighborhood Infrastructure, Solar Panels
8. Neighborhood Gathering Place(s)
9. Hometown Feeling: Access to "Downtown" or Activity Center
10. Places for Children/Youth
11. Dog Friendly
12. Welcoming New Neighbors
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
B Question 4:
Vibrant Community — what does that
mean and what are future
opportunities?
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
Vibrant Community —
Definition and Future Opportunities:
Common Themes
► Common Themes
1. Nightlife: Dining and Entertainment
2. Cultural Diversity
3. Community Events/Festivals: Traditional, New and Culturally Diverse
4. Live Entertainment: Performance, Concerts
5. Community Gathering Places
6. Green and Open Space: Personally Inviting
7. Safe Feeling: Any Time of Day
8. Activities for All: Youth, Young Adults, Adults and Seniors
9. Respect for Difference: Welcoming and Polite
10. Art and Cultural Festivals
11. Community Foundation
12. Sustainable Infrastructure
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
C Question 5:
StronLy and Diverse Local Economy —
what does that mean and what are
future opportunities?
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
Strong and Diverse Local Economy —
Definition and Future Opportunities:
Common Themes
► Common Themes
1. Expanded Retail Businesses
2. Job Opportunities for Residents: Young Adult, Adult
3. Community Destination: Downtown/Activity Center
4. Business Promotion of Local Businesses
5. Variety of Office Spaces for Businesses
6. Tech Business Development
7. Dining/Entertainment Business Development
8. Cultural Events as a Economic Driver
9. Redevelopment of Old Business Areas/Commercial Centers
10. Leveraging our Diverse Cultures
11. Bear Stadium
12. Academic and Research Development
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
D QUESTION 6:
One Inclusive and Welcoming Community —
what does that mean and what are future
opportunities?
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
One Inclusive and Welcoming Community —
Definition and Future Opportunities:
Common Themes
► Common Themes
1. Diverse Events Celebrating our Cultures
2. Community Diversity Commission/Committee
3. Welcome New Residents: Welcome Packet/Wagon, Meet and Greet
4. Support of Diverse Youth
5. Diverse Culture Engaged: Volunteering, Involved in Governance
6. Development of Partnerships: Diversity and Inclusive
7. Affordable Housing for All
8. Communication with All: Different Methods, Community Message Board
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
A QUESTION 7:
What are other issues and opportunities for
our Buffalo Grove community?
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
Other Issues and Opportunities for Buffalo Grove:
Common Themes
► Common Themes
1. Expanded Communications with our Community: Different Modes, Social
Media
2. Bear Stadium: Positive Impacts on Buffalo Grove
3. Wireless, High Speed Internet Connections
4. Undergrounding Utilities
5. Expanded Volunteer Opportunities
6. New Business Development: Chicken Pickle
7. Expanded Involvement Youth, Young Adults and Young Families
8. Fire Station (East of the Tracks)
9. Satellite Library
10. Improved Traffic Management: Traffic Signals Synchronization
11. Expanded Economic Development
12. More Walkable Community
13. Culinary Event
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
B QUESTION 8:
During the next two years, what would you
suggest as topics, projects or service
enhancement for Village government?
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
Short Term Topics, Projects or Service Enhancement
for Village Government:
Ideas
► Common Themes
1. Expanded Village Communications, including Website Upgrade
2. Vacant and Abandoned Building: Code Enforcement, Filling Vacancies
3. Improved Street Lights
4. Business and Job Development
5. Clove Development Success
6. Expanded Online Village Services
7. Sustainability Plan and Promotion
8. Enhanced Snow Plowing
9. More Diverse Village Staff
10. Solid Waste Improvement, including Composting
11. Expanded Cultural Events
12. Fire CPR Training
13. Faster Permitting Process
14. Social Worker in Police Department
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Community Suminit 2023 Summary Report /President and Trustees/Buffalo Grove, Illinois
► Common Themes
15. Intergovernmental Collaboration and Cooperation
16. Green and Open Space Protection and Expansion
17. Post Office Upgrade/More Attractive
18. Safe Pedestrian Crossings
19. Reduced Neighborhood Speeding
20. Safety Planning with Faith -based Institutions
21. Sump Pump Discharge Issues Addressed
22. Road Improvement: Bernard
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2.0
Information Item : 2023 20-Year Water Pro -Forma
........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Recommendation of Action pp
ll
Staff recommends discussion
Attached for the Board's discussion is the Twenty -Year Water Rate Pro -forma which reflect the latest
rates and capital expenditures.
ATTACHMENTS:
• COW Memo 6.4.23 Water PF (DOCX)
• COW Att 06.04.23 Water PF (PDF)
Trustee Liaison
Smith
Monday, June 5, 2023
Staff Contact
Chris Black, Finance
Updated: 6/1/2023 1:36 PM
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JLL AG1,'1,'
TO: Dane C. Bragg, Village Manager
FROM: Chris Black, Finance Director
DATE: June 4, 2023
RE: FY 2023 20-year Water Pro -Forma
Background
In 2012, the Village developed a 20-year Water and Sewer Fund pro -forma to evaluate the water and
sewer system's infrastructure needs. As identified in previous pro -forma, the Village's historical rates
were not sufficient to fund water and sewer operations and capital needs.
In 2019, the Village Board directed staff to develop a formal funding strategy for the Water and Sewer
Fund that would allow needed capital improvements to occur over the next 20 years. The goal was to
develop a funding strategy to complete $150 million of sewer/water infrastructure. The strategy could
not impact the Village's property tax levy and maintain a competitive water rate amongst other
providers within the region.
As a result, the Village Board adopted a new rate structure and fixed facility fee, effective January 2020.
Furthermore, the Village implemented a new local motor fuel tax in an effort to align roadwork with
water/sewer improvements. For the Board's review is an updated 20-year water pro -forma reflecting
the new rate structure as well as the issuance of debt in 2020. The pro -forma shows that Public Works
is able to complete over $150 million in water and sewer capital infrastructure through 2042.
Rate and Consumption History
The Village maintained a water and sewer rate of $1.80/1,000 gallons for twenty-three years (1983-
2005). Funding for future infrastructure replacement was never a component of the rate structure.
The Village was able to adequately maintain the water and sewer system without increasing rates
during the time period for several reasons. First, Developers donated approximately 53 percent of the
water and sewer system assets when the Village experienced growth in the 1980's and 1990's. In
addition, revenues increased due to growing water consumption and the receipt of building and
development fees. Growing revenue, combined with more limited capital needs due to the age of the
system, allowed the Village to fund infrastructure improvements on a pay-as-you-go basis from Water
and Sewer Fund cash reserves.
Beginning in 2003, a pattern of declining water usage started. In 2002, 1.63 billion gallons of water
were billed. In 2022, the Village billed customers for 1.13 billion gallons, a decrease of 30.6 percent
from 2003. Billable gallons are not expected to reach those levels again, absent a significant drought
or the addition of heavy industrial uses. The following chart shows the annual gallons billed since 2012.
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Annual Gaflons Billed(ism -thousands)
1.,150,000
1,1.00,000 1111111111
1„050,000
201..3 2014 2015 2016 201.7 201.8 2019,2020 2021, 2022
The latest pro -forma uses an estimate of 1.15 billion gallons and will carry forward through the next
20 years. Although there will be an increase in total consumers over the next two decades with Link
Crossing and the Lake Cook Corridor Developments, continued conservation efforts, weather patterns,
and other impacts on water usage could partially offset that growth.
The Village has an agreement in place for the resale of potable water to the Pekara and Horatio
Gardens neighborhoods with the Lake County Public Works Department. The proposed agreement
allows the Village to utilize its existing pumping and reservoir capacity to provide water to
Pekara/Horatio Gardens while providing a high -quality and reliable water source. The pro -forma
includes revenue and expenses related to the agreement beginning in the fourth quarter of 2024. Also,
the projected expenses and revenues of a Utility Loan Program were included in the pro forma. The
financial impact of the program on the Water and Sewer Fund is negligible.
Water and Sewer System Assets
The utility system consists of 185 linear miles of water and sewer main. Based on actual experience in
the field, the service life of the water main infrastructure is 65 years. Over the next 20 years, it is
estimated that 24 percent of the water mains will reach the end of their useful life. As the first iterations
of infrastructure replacement have come due, the Village has engaged in extensive study of the system
and developed a replacement program, culminating in 2020's Infrastructure Modernization Program. The
following chart shows the pattern of construction of water main since 1929.
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2.00,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
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Sewer assets have a longer life span as the structures are not pressurized. The Village's preferred
approach is to line existing sanitary sewer mains, thereby extending the life considerably while reducing
the life cycle cost of the asset. As a general rule, sanitary sewer lining can extend the life of a gravity -fed
main by 50 years.
Recent Rate Changes
Fixed Facility Fee
As recommended in the water and sewer rate analysis prepared by Strand and Associates, the Village
Board implemented a new fixed facility fee per metered utility account, starting in 2020. The fixed
facility fee is a flat rate assessed to each metered account for access to the water and sewer system.
The fixed fees collected are used for the maintenance and replacement of the capital infrastructure for
the delivery of clean water and the removal of the wastewater. The current fee schedule is as follows:
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6" meters
$199.20
The fixed fee will be evaluated everyfive years by utilizingthe aggregate Consumer Price Index(CPI-U) over
the preceding five-year period to determine if the rate must be increased. The 20-Year Water/Sewer
Pro -Forma assumes a 10 percent increase to the facility fee to occur in 2025.
Water/Sewer Rate
The Village's consumption model is driven by water rate and consumer use. The fees collected from
system users should cover operating expenses such as the cost of the water sourced from the
Northwest Water Commission as well as the cost for pumping, storage and distribution. In 2020, the
Village Board approved a one-time 11 percent increase, so revenue would keep pace with expected
increases in operating expenditures. Beginning in 2021, the rate will increase each year by 4 percent,
as adopted by ordinance by the Village Board. The current combined sewer and water rate per 1,000
gallons is $7.94.
Historically, the Water and Sewer Fund addressed infrastructure maintenance and improvement on a
pay as you go basis. Due to the relative age of the system, many system repairs and replacements are
coming due over the next 20 years based on the growth periods for the Village. Since 2012, $33.6
million in infrastructure repairs and improvements has been spent, including $6 million in water meter
replacement costs. The meter replacement costs were funded through an installment note scheduled
to be retired in 2029.
As noted, the Village Board approved two revenue streams, a fixed facility fee combined with a
water/sewer rate increase and a local motor fuel tax to fund capital improvements. These actions
allow the Village to address the first generation of major water and sewer infrastructure replacement,
as well as street repair and replacement. By combining utility and street improvements, the Village is
able to comprehensively address repairs and improvements in neighborhoods and limit disruption to
residents.
In May 2020, the Board also approved the issuance of a bond totaling $26 million - $13 million for
water/sewer and $13 million for streets, to begin the Infrastructure Modernization Program. The
entire amount of the bond proceeds were exhausted on projects by the end of FY 2022. The long-term
goal is to transition from a debt and cash strategy to a cash -only strategy (pay-as-you-go) to fund all
system replacements.
From 2020 through 2024, the Village has programmed $27.3 million in water and sewer capital
projects. The Village completed approximately $9 million in capital projects in FY 2022. The Village will
utilize water and sewer reserves from 2023 through 2029 to fund capital improvements. In 2030 and
again in 2033, the Village will need to issue additional debt to keep pace with the water and sewer
improvements. The debt could be fully supported by water and sewer user charges. All debt is
scheduled to be retired by 2048.
After completing the largest surge of infrastructure replacement through 2036, the Water and Sewer
fund begins to rebuild cash balances exceeding from 2037-2042, while also supporting over $50.1
million in capital improvements during the same period. As a result of the Village's careful
infrastructure planning, Public Works is able to complete over $150 million in water and sewer capital
infrastructure through 2039, consistent with the recommendations of the Strand & Associates
water/sewer system study.
Page 4
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Information Item : 2023 5-Year General Fund Forecast
........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Recommendation of Action pp
ll
Staff recommends discussion.
The purpose of the five year general fund operating forecast is to provide a basis for the Village of Buffalo
Grove make informed, operational decisions through strategic forecasting to anticipate of future revenues
and expenditures. The fiscal year 2024 through 2028 General Fund Forecast is attached.
ATTACHMENTS:
• Five Year General Fund Forecast 2024-2028 (DOCX)
Trustee Liaison
Pike
Monday, June 5, 2023
Staff Contact
Chris Black, Finance
Updated: 6/1/2023 2:22 PM
Page 1
Packet Pg. 32
2.D.a
Village of Buffalo Grove
A Financial Assessment of General Fund
Revenues and Expenditures
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2.D.a
The purpose of the Five -Year Operating Forecast is to help the Village of Buffalo Grove make
informed, operational decisions by better anticipating future revenues and expenditures. Using
the forecasted data, the Village can plan strategies for providing a consistent, appropriate level
of service to the customers while ensuring the revenues and expenditures remain in a sustainable
balance. The primary objective of the forecast is to provide the Village Board and related
stakeholders with an early financial assessment and identify significant issues that should be
addressed in the budget development process. For the purposes of constructing the forecast,
operating revenues are measured against operating expenditures without including any prior
period fund balance to subsidize revenue.
The goals of the forecast are to assess the Village's ability,
over the next five years, to maintain current service levels
based on projected revenue growth, evaluate future
sustainability by aligning operating revenues and
expenditures, and ensure proper funding of infrastructure
reserves. The assessment analyzes the capacity to fund
capital projects and maintain an unassigned fund balance
reserve at three months of budget expenditures (25%).
It is important to stress that this forecast is not a budget. It
does not dictate expenditure decisions; rather it identifies the
need to prioritize allocations of Village resources. The forecast
sets the stage for the budget process and aids both staff and
the Village Board in establishing priorities and allocating
resources appropriately.
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As a governmental entity, changes in strategy that involve service delivery should be slow and
methodical. The forecast provides a snapshot of the Village's fiscal health based on numerous
assumptions over the next five years. The forecast is a planning tool and should be considered
fluid in its construction. As new significant data or trends emerge the document will be revised,
at minimum, on an annual basis.
In each of the five years, revenues offset operating expenses and the budgets are anticipated to
be in balance. However, expenses are expected to outpace average annual revenue growth by
0.9 percent per year. After including amounts needed for reserves and capital, there is a shortfall
every year in the forecast. This illustrates the need to continue efforts to finance capital
improvements, as well as operating efficiently and review revenue sources for adequacy,
efficiency, and diversification.
Packet Pg. 34
2.D.a
The General Fund is the main operating fund and accounts for the core public services provided
by the Village including public safety (police & fire), public works, community development, as
well as operations that support core services. All major discretionary revenues such as property
tax, sales tax, income tax, telecommunication excise tax, and utility use tax are accounted for
within the General Fund. The Finance Department works with departments responsible for
administering the service and/or collecting the associated revenue to develop program revenues.
The expenditures assumed in the forecast are based on the current service levels. No additional
staffing has been included in the estimates. Actual expenditures for 2022 and the 2023 budget
amounts are the basis for the five-year estimates. The General Fund is the primary focus of the
forecast because it represents nearly half of the total Village Budget. The second largest Village
Fund is the Water and Sewer Fund accounting for 12.3 percent of the total budget. A twenty-year
funding analysis is completed annually for that enterprise activity.
In the absence of any known service level modifications, the forecast assumes the continuation
of current service levels and the costs projected over five years. Revenues are estimated based
on anticipated growth and do not consider increases in revenues generated by new fees or
increases in fees, new development, or charges beyond what is prescribed by current ordinance.
Packet Pg. 35
2.D.a
In the development of a long-term financial forecast, the Village reviews external and internal
factors that could impact either the collection of revenue or the price of acquiring goods or
providing services. Evaluating how the regional impact of the national economy (macro)
influences the local economy (micro) is an important step in the process.
The national economy affects both state and local economies, although this impact varies by
jurisdiction and may actually have an inverse effect on a community. Some of the economic
indicators the Village uses in financial analysis include: inflation, stock market returns,
employment, housing starts, vehicle sales, interest rates, and manufacturing activity.
Inflation —The Consumer Price Index (CPI), commonly referred to as the inflation rate, measures
the average price change for a market basket of consumer goods and services. The Bureau of
Labor Statistics classifies each expenditure item in the basket into more than 200 categories
catalogued into eight major groups. The Consumer Price Index is used as the inflationary factor
for specific non -personnel services.
The cost of goods sold increases with inflation, leading to additional retail sales tax revenue. As
prices rise, so will business income tax receipts. Conversely, the Village will have to pay more for
goods and services. The most recent (April 2023) Consumer Price Index is at 4.9 percent, which
is the smallest 12-month increase since April 2021.
Stock Market Returns — Stock market returns are a leading indicator and will change before the
economy changes. Approximately 70 percent of all Village pension funds are invested in mutual
funds and/or individual stocks. The performance of the stock market is a significant factor in
determining the growth of the property tax levy for pensions. It is assumed the pension funds
will earn seven percent annually through investment returns.
Employment— Retail and vehicle sales tend to have inverse relationships with the unemployment
rate. Sales tend to move in the opposite direction of the unemployment rate. Chronic
unemployment often spills over into the residential real estate market resulting in lost real estate
transfer tax revenue.
Housing Market - This indicator provides a sense of the overall demand for housing, which can
be indicative of local housing activity. Data maintained by local realtor groups is useful in
projecting the future of market recoveries.
Interest rates — The interest rate impacts the Village's revenues in several ways. The availability
and cost of capital directly affects business expansion and retail purchases. As credit is extended
and/or rates are lowered, revolving purchases may increase, thereby increasing development
plans and retail sales and, by extension, sales tax and business licenses revenues. Second, the
village's investment income will be affected by interest rates.
Packet Pg. 36
2.D.a
Manufacturing activity —If a Village has a large manufacturing sector, the ISM (Institute of Supply
Management Index) becomes a significant factor in revenue analysis and forecasting.
Manufacturers respond to the demand for their products by increasing production and building
up inventories to meet the demand. The increased production often requires new workers, which
lowers unemployment figures and can stimulate the local economy.
Although national economic indicators do have some trickle -down impact on the Village Budget,
there are regional and local economic factors that have a direct influence over revenues and
expenditures. Some of those factors that have been considered moving into the next five year
update include:
• Impact of the Real Estate Market and Assessed Valuations. Assessed values for taxable
property continue with positive growth. Lake County property values increased by 1.56
percent in FY 2023, while Cook County property values are anticipated to increase slightly
once valuations are reported by the county. See the chart below to see the ten-year,
combined county history of equalized assessed values.
• State of Illinois Legislation. As the State of Illinois has experience financial difficulties over
the last decade, staff continues to monitor legislative discussions that could have a direct
financial impact on Village revenues.
• Impact of Employer Pension Costs. The tax levies for the three pension systems account
for 44.5 percent of the property tax levy. Additional pressure on the tax levy to support
growing pension costs will impact the ability to increase taxes for core services. Bond
rating agencies continue to site pension obligations as a downward pressure on the
Village's ability to maintain the Aaa rating with S&P.
• Health Care Inflation. After wages, health care costs are the single largest expenditure
category in the fund and the Village continually reviews the structure of the plan to limit
Packet Pg. 37
2.D.a
the amount of growth on an annual basis. The Village is a member of the
Intergovernmental Personnel Benefits Cooperative (IPBC). This insurance pool helps to
dilute risk and helps to leverage purchasing power.
• Commercial/Retail Development. The economy's impact on existing sales tax generators
as well as development or redevelopment of Dundee, Milwaukee Road corridors and Lake
Cook Corridors continues to be an important cog in economic development. with the
adoption of the Lake Cook Road TIF, the Village has seen several new projects get
completed such as the NCH Office Building and the $150 million Clove Development,
which is currently under construction.
• Infrastructure. The ability to keep pace with the maintenance needs of Village owned
assets continues to be a significant financial challenge. The Village owns and maintains
$255 million in capital assets, excluding depreciation, across all activities.
Packet Pg. 38
2.D.a
Listed below is the five-year update to the General Fund Forecast. The remainder of the report
will describe the methodologies used to develop both revenues and expenditures.
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Revenue 2024 2025 2026 2027 2028 Growth
Property Taxes
1.02
17,115,900
17,458,218
17,807,382
18,163,530
18,526,801
Income & Use Taxes
1.025
7,610,400
7,800,660
7,995,677
8,195,568
8,400,458
State Sales Tax
1.025
8,478,300
...,..
8,690,258
... ... , ,,,., ... ... ... ...
,,,,, 8,907,514
9,130,202
9,358,457
Home Rule Sales Tax
1.02
6173,200
6,29 6,664
6,422,597
6,551,049
6,682,070
Real Estate Transfer Tax
1.03
1111
1,121,700
1 155 351
1 190 012
IIII 1,225,712 1111
1,262,483
Telecommunications Tax
1.00
720,000
720,000
720,000
720,000
720,000
Prepared Food and Beverage
Tax ,,
793,100
816,893
841,400
866,642
892,641
1.03
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1.00
2,650,000
2,650,000
2,650,000
2,650,000
2,650,000
Licenses
I350
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1.00I
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350,000
350 000
350000
350 000
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Building Revenue & Fees
g
1.01
1,235,000
1,247,350
1,259,824
1,272,422
1,285,146
Intergovernmental Revenue
Local
223,300
227,766
�
232,321
236,968
241,707
1.02
Fines & Fees -Police & Fire
1.01
2,338,100
2,361,481
2,385,096
2,408,947
2,433,036
Storm Water Management
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1.00
Fees
1 14- 000
,,,,,,,,,,,,,,,,1,,,,,,0,,,,,,,,,,,,,�,,,,
1 140 000
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1 140 000
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1,140,000
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1,140,000
,,,,,,,,,,,,,,
Operating Transfers
1.02
825,000
841,500
858,330
875,497
893,007
Cable Franchise Fees
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1.00
735,000
735 000
735,000
735 000
735 000
Miscellaneous Revenue
1.01
961,000
970,610
980,316
990,119
1,000,020
Total Revenues
52,470,000
53,461,751
54,475,468
55,511,655
56,570,826
Annual Increase
3.0%
1.9%
1.9%
1.9%
1.9%
Expenditure,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
2024
2025
2026
2027
2028
Growth
Personal Services
24,599,815
25,337,810
26,097,944
26,880,883
27,687,309
1.03
Personal Benefits
12,150,072
f 12,514,574
12,890,011
13,276,711
f 13,675,013
1.03
Operating Expenses
3,669,073
J 3,742,454
3,817 303 �J
3,893,649
J 3,971,522
1.02
Insurance & Legal Services
1,606,329
f 1,670,582
1,737,405
1,806,902
f 1,879,178
1.04
Commodities
401,186 1
411,216
421 496
432 033 1
442,834
1.025
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Maintenance & Repairs
f 3,546,887
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3,635,560
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3,726,449
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3,819,610
3,915,100
1.025
All Other Expenses
4,083,647
4,124,484
4,165,728
4,165,728
4,207,386
1.01
Total Expenditures
50,057,009
51,436,679
52,856,337
54,275,516
55,778,342
Operating Surplus/(Shortfall)
2,412,991
2,025,072
1,619,131
1,236,139
792,484
Annual Increase
3.8%
2.8%
2.8%
2.7%
2.8%
Packet Pg. 39
2.D.a
The forecast provides three levels of analysis. The first level (above) is to show the General Fund's
ability to meet day-to-day expenditures. The highlighted row design (Operating Surplus/Deficit)
is an indicator of whether anticipated revenues support operating expenditures. In all five years
of the forecast, revenues will support current services. This is a measure of short-term
sustainability. The second level of the analysis includes transfers for capital projects and
infrastructure reserves.
Long term sustainability is measured through the Village's ability to invest in infrastructure
including funding reserves for vehicles, buildings, equipment, technology, streets (though State
and Local Motor Fuel Tax), and projects in the Capital Improvement Plan. All projects submitted
for inclusion in the FY 2023-2027 CIP have been added to this report. After including these
transfers, the cumulative fund shortfall at the end of FY 2028 is estimated to be nearly $114.5
million.
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Revenue
2024
2025
2026
2027
2028
Growth
Property Taxes
1.02
.............
17,115,900
17,458,218
17,807,382
18,163,530
18,526,801
Income &Use Taxes
1.025
7,610,400
7,800,660
7,995,677
8,195,568
8,400,458
State Sales Tax
1.025
8478300
8 258
690
8907514
9130202
9 358 457
Home Rule Tax I x
1.02
6,173,200
6,296,664
6,422,597
6,551,049
6,682,070
Real Estate Transfer Tax
1.03
1,121,700
1,155,351
1,190,012 III
1,225,712
1,262,483
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Telecommunications Tax
1.00
720000
720000
720000
720000
720000
Prepared Food and Beverage Tax
1.03
793,100
816,893
841,400
866,642
892,64E
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Utility Tax-Electric/Natural Gas
Y
1.00
2 650 000
2 650 000
2 650 000
2 650 000
2,650,000
Licenses
1.00
350,000
350,000
1 350,000
350,000
350,000
..
Building Revenue & Fees
1.0E
1,235,000
1,247,350
1,259,824
1,272,422
1,285,146
Intergovernmental Revenue-
1.02
Local
223,300
227,766
232,321
236,968
241,707
Fines & Fees Police & Fire
2,338,100
2,361,481
2,385,096
2,408,947
2,433,036
Storm Water Management Fees
1.00
............. . . U
1 140 000
1 140 000
1 140 000 I
1 140 000
1 140 000
..
Operating Transfers
1.02
825,000
841,500
858 330
875 497
893,007
Cable Franchise Fees
1.00
735,000
735,000
735,000
735,000
735,000
Miscellaneous Revenue
1.01
961,000
970,610
980,316
990,119
1,000,020
Total Revenues
52,470,000
53,461,751
54,475,468
55,511,655
56,570,826
Annual Increase
3.0%
1.9%
1.9%
1.9%
1.9%
Packet Pg. 40
2.D.a
Expenditure
2024
2025
2026
2027
2028
Growth
Personal Services
24,599,815
25,337,810
26,097,944
26,880,883
27,687,309
1.03
Personal Benefits
12,150,072
,.
12,514,574
12,890,011
.................13,276,711
13,675 013
1.03
Operating Expenses
3,669,073
3,742,454
(
3,817,303
3,893,649
3,971,522
1.02
Insurance & Le g I(
Legal Services
1 606 329
f
1 670 582
f
1 737 405
1 806 902
f
1,879,178
1.04
Commodities
401,186
411,216
(
421,496 J
432,033
442,834
1.025
Maintenance & Repairs
p
3 546 887
f
3 635 560
f
3 726 449
3 819 610
f
3 915 100
1.025
All Other Expenses
4,083,647
4,124,484
4,165,728
4,165,728
4,207,386
1.01
Total Expenditures
50,057,009
51,436,679
52,856,337
54,275,516
55,778,342
Operating Surplus/(Shortfall)
2 412,991
2,025,072
1,619,131
1,236,139
792,484
Annual Increase
3.8%
2.8%
2.8%
2.7%
2.8%
Capital Transfers & Subsidies
2024
2025
2026
2027
2028
Capital - Vehicles
1,936,000
1,605,000
1,855,000
1,541,000
2,100,000
Capital Facilities
7,045,000
180,000
150,000
9,500,000
3,380,000
Capital Technology
275,000
360,000
215,000
265,000
275,000
Capital Stormwater
655,000
655,000
100,000
750,000
655,000
Street Program
19,000,000
15,000,000
15,000,000
15,000,000
15,000,000
Capital Reserve Funding
1,980,000
1,980,000
1,980,000
1,980,000
1,980,000
Total Transfers
30,891,000
19,780,000
19,300,000
29,036,000
23,390,000
Total Fund Surplus/(Shortfall)
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The current budgeting strategy is to contribute to capital reserve programs in order to remain on
a pay-as-you-go basis of capital asset financing. If reserve amounts are depleted, or inadequately
funded, staff will need to consider debt financing for future expenditures.
Over the next five years it is anticipated that $74.1 million funding is needed, above the current
forecasted amounts in the General Fund. However, the Village Board has addressed
infrastructure funding needs through by the approval of increased water/sewer rates, a local
motor fuel tax, and adult use cannabis tax. In addition, the Village utilized American Rescue Plan
Funds for infrastructure improvements. In 2020, the Village successfully issued $24 million in
general obligation bonds fund infrastructure improvements. Bond issues are planned for 2025,
2030, and 2033 to fund future improvements. The revenue enhancements and bond issue
support the Infrastructure Modernization Program, a five-year strategy to invest $175 million in
streets, sewer and water infrastructure.
Unfunded
2024 2025 2026 2027 2028
Street Program
al Unfunded/Debt
„Tot„
18,020,000
18,020,000
14,020,000
14,020,000
14,020,000
14,020,000
14,020,000
14,020,000
14,020,000
14,020,000
Packet Pg. 41
2.D.a
The General Fund Reserve Policy sets forth a minimum unassigned reserve level of 25 percent of
the subsequent year's budget, excluding transfers to fund capital projects. The preferred balance
per policy is 30 percent. Unassigned fund balance above the 30 percent threshold may be
allocated to a reserve for debt service retirement and revenue stabilization.
It is important to maintain a strong reserve level for several reasons, (1) it provides more time to
react and respond to revenue threats created by economic conditions, (2) it helps to better
withstand any unfunded legislative mandates that will create additional expenditure obligations
without corresponding revenue, and (3) to fund unforeseen infrastructure/capital asset costs.
Spending down of prior period reserve balances allows the Village time to reallocate resources
within the budget and restructure service levels to react to the fiscal environment. After drawing
down on the balance to respond to emergency conditions, it is important to rebuild those
reserves in order to remain flexible to respond to the next threat. Fund balance should never be
used to support day-to-day operations. Absent an unforeseen economic crisis, the use of reserves
to support operating expenditures represents a budget that is structurally unbalanced.
The estimated General Fund balance unassigned reserve at the end of FY 2022 is $17.7 million or
35 percent of the FY 2023 operating budget. The Village also has designated an additional
$770,000 for revenue stabilization.
Packet Pg. 42
2.D.a
Approximately 81 percent of all General Fund revenue is generated from seven revenue sources
including property tax, combined sales tax including prepared food and beverage, income and
use tax, telecommunications tax, utility (natural gas & electricity) use tax and real estate transfer
tax.
Almost half of the Village's major revenue sources are elastic. Elastic revenues are those sources
that tend to fluctuate with the economy. A balance between elastic and inelastic revenue is
desired as a hedge against market volatility. General Fund revenues considered to be elastic
include: sales and use taxes, income taxes, real estate transfer tax, building revenue and fees,
and investment income. The property tax is an example of a non -elastic source of revenue as
collections are stable and predictable.
The Village continues to seek to be less reliant upon state -shared revenues (income, base sales,
and telecommunication taxes) and align core services with taxes/fees under local home rule
control.
There are three components to the Village's property tax levy. The first component is the
Corporate Levy. This levy helps to fund public safety (police and fire) operations. The growth in
the corporate levy is tied to inflation. The second component is the Debt Service Levy. This levy
covers the principal and interest payment on outstanding debt issuances. The last component is
the special purpose/pension levies.
The tax levies for the three pension funds (police, Firefighters and IMRF) are calculated by
independent actuaries. The levies are structured to cover the normal cost of the pension, an
amortized annual amount of the unfunded actuarial liability, and the interest cost on that liability.
Unfunded liability grows when actuarial assumptions are not met (interest rate) or when
legislative changes (Springfield) are enacted that enhance benefits. Those legislative changes
produce unfunded liabilities.
Each year the Village determines its levy amount. Since debt service payments are mandatory as
are pension contributions, the amount of control the Village has over the tax levy is limited to
the Corporate Levy.
Future ability to raise property tax revenue to support General Fund operations is challenging as
the corporate levy must compete for tax dollars with pension and debt service levies.
See the chart below to see where property tax dollars are allocated.
Packet Pg. 43
2.D.a
Debt Service, 2.0%
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The levy request is then applied to the equalized assessed value of all property within the Village
to determine a tax rate. Assuming the same tax levy amount, if the property values go up the
rate goes down and conversely the rate goes up if the values decline.
The total equalized assessed value of property in Buffalo Grove is estimated to be $1,799,567,281
representing a 1.85 percent decrease from the previous year. The Lake County portion of the
Village's EAV increases 1.56 percent year over year.
Packet Pg. 44
2.D.a
Inflation sets the growth baseline for both the base (2%) and home rule sales taxes (2%).
Combined, this is the second largest revenue source for the Village. The base sales tax revenue is
directly related to the dollar value of sales made within the Village. Home rule sales tax applies
to the same transactions as the base sales tax except in the following transactions, food for
human consumption off the premises where sold (groceries), prescription and non-prescription
medicines and tangible personal property that is titled with an agency of the State of Illinois.
The assumption for the five-year analysis is that the retail mix will remain substantially similar to
what is present today with the exception of new retailers where development plans are
approved. The forecast applied to both base and home rule sales tax produces the following:
Base Sales Tax
Packet Pg. 45
2.D.a
Horne Rule Sales Tax
2022 2023 2024 2025
rlkr)pjf�*114 t
The Village's strives to diversify its retail tax base so that no one sector is overly exposed to
economic and/or demand fluctuations. The following chart reflects the Illinois Department of
Revenue Standard Industry Codes (SIC) for sales tax remitted to the Village.
Manufacturers--, General Merchandise
0
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Automotive & Filling
Stations
7%
r
Apparel Places
Furniture,HH, & Radio
13%
The Illinois Income Tax is imposed on every individual, corporation, trust, and estate earning or
receiving income. The tax is calculated by multiplying net income by a flat rate. The current rate
is five percent of net income. The rate reverted to 3.75 percent beginning January 1, 2015 to
December 31, 2024. The rate will then reduce to 3.25 percent starting on January 1, 2025. The
formula for distribution for local governments was 10 percent of the revenue, allocated on a per
capita basis, when the rate was 3 percent. When the state rate increased to 5 percent, the
increase was not included in the distribution making the effective per capita distribution to
municipalities six percent.
Packet Pg. 46
2.D.a
The Village's unemployment rate as of April 2023 is 3.1 percent, which bests the state of Illinois
(4.2 percent) and the U.S. (3.4 percent). Income receipts performed very well in 2022 and for
the first four months of 2023 due to low unemployment and strong corporate profits.
Income Tax
2020 2021 2022
This tax (1%) was adopted in 2008 and is levied on the purchase of prepared food for immediate
consumption and the sale of liquor. Similar to sales tax, inflationary growth is the primary reason
for revenue increases. The source is projected to increase two percent annually. There are
approximately 100 establishments that charge and remit this tax to the Village.
This tax levied at 6 percent on all types of telecommunications except for digital subscriber lines
(DSL) purchased, used, or sold by a provider of internet service (effective July 1, 2008). The
exemption of DSL service has made a significant impact on collections. Recent legislation has also
mandated that data packages no longer be bundled with all other telecommunications billing for
the sake of taxation. Those services have been exempted. This revenue source is down 49.2
percent in FY 2022 from $1.3 million in FY 2019. The forecast calls for no change over the
remainder of the plan.
Natural gas and electricity charges are based on consumption and will fluctuate with seasonal
demands. The Village is charging the highest statutory rate. There is no consumption growth
projected over the next five years. Any new growth will be predicated on adding square footage
to houses or buildings and offset by more energy efficient construction and mechanical systems.
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Real estate transfer tax is collected at the rate of$3 per $1,000 of sales consideration. Sales
recovered from FY 2012, when the market reached a low point, through FY 2018. |nFYZO33,tax
receipts totaled $2.0 million due tothe strong real estate market, which resulted in a high volume
ofsales and increasing sales prices.
Real Estate Transfer Tax
092=1
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2.D.a
The average annual increase in operating expenditures over the next five years is 2.7 percent. In
each of the next five years, wages and benefits account for about 68 percent of all operating
expenditures. The next largest expenditure account group is for all other expenses (8 percent).
For FY 2023 the distribution of General Fund expenditures is shown in the table below.
Capital Reservp.
Tra
All Other Expen
8%
1 a 1 "'t e n a i°ua;;
e p'alrs
6"Y'
Cre. n � i, r iod P,lif,:s
"Ih%
linsiiiwraorce & III ..nE
3
n;;rlri iu l: n
Pernainall Beinefillf:*
2%
Capital Improvement
Plan
3%
13ersa�ll"nal Sall°M�daes
%
Wages are anticipated to increase by a factor of three percent each year. The wage forecast
anticipates the general wage increases plus merit -based pay range adjustments. The forecast
does assume retirements with a replacement hired at a lower starting salary.
Over half of the workforce is covered by collective bargaining agreements and the Village has less
flexibility when addressing wages within the police and fire departments.
The budgeted full-time staffing is 214 employees. For all positions, the ratio of municipal
employees per 1,000 residents is 5.0 compared to a ratio of 7.8/1,000 in 2010.
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2.D.a
A major initiative in FY 2015 was to establish a pay for performance system that will allow
employees to move through their pay ranges. A merit wage pool was included in the FY 2023
Budget and managed by the Human Resources Department. The ability to advance employees
through their pay range based upon performance is critical in maintaining an effective and
motivated work force.
The largest single expenditure within Personal Benefits is for health insurance. The Village is a
member of the Intergovernmental Professional Benefits Cooperative (IPBC). As a member of
IPBC, the Village is better able to stabilize medical costs through risk pooling and provide for a
mechanism to help establish positive cash flow and rebuild reserves. The forecast calls for three
percent growth each year in annual premium expense.
The employees' contribution is set at 15 percent of the premium in FY 2023. Continued efforts
will be made to maintain costs. A renewed emphasis on wellness programs and evaluating data
will be critical in the next few years to help stabilize experience.
Employer pension costs have been assigned to each operating department budget. The intent of
the accounting was to better represent the true cost of providing a specific service. Employer
pension obligations are anticipated to be $6.6 million in 2023 or 12.6 percent of General Fund
operating expenditures.
Within the Insurance category is the premium paid for general liability and workers'
compensation coverage. In FY 2016, the Village moved from the Intergovernmental Risk
Management Pool (IRMA) for general liability and workers' compensation coverage to establish
a risk premium structure that is more commensurate with the Village's service profile and asset
values.
The Village is a founding member of the Suburban Liability Insurance Pool or SLIP. The purpose
of SLIP is to share risk with similarly sized, full -service communities and mitigate increases in
premium costs and develop economies of scale for administrative services.
The single largest expenditure within the Commodity account group is for purchase of salt for the
snow and ice control program. The forecast calls for increases of 2.5 percent per annum. Staff
continue to seek innovative ways to reduce commodity costs, such as bulk electric procurement,
and utilizing centralized purchasing to leverage the Village's buying power.
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2.D.a
Expenditure growth in this account group is estimated to be 2.5 percent per year. Included in
these expenditures are costs related to the maintenance and repair of sidewalks and bike paths,
street patching, streetlights, building facilities, vehicles and parkway trees. Included in these
costs are Internal Service Fund charges for Central Garage and Building Maintenance
expenditures.
Included in the transfers are $7.6 million for vehicles, technology, storm water and building
reserves for the General Fund over the next five years. If the Village intends to continue with a
pay-as-you-go approach to acquiring vehicles, supporting technology infrastructure and repairing
facilities, then these transfers should be programmed.
It should be noted that the reserve amount for facilities is the minimum to address various
maintenance needs and does not provide funding for major repairs including roof replacements,
purchase of mechanical systems and/or functional remodeling.
There is $112.5 million in capital projects included in the five-year forecast. The projects are taken
from the current Capital Improvement Plan (CIP) and the details of those projects are included in
the FY 2023 annual budget. The amount of the capital reserve funding is not sufficient to meet
the needs of certain CIP program areas.
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2.D.a
In each of the five years, revenues offset operating expenses and the budgets are anticipated to
be in balance. This statement should be viewed with caution as revenues are expected to grow
on average 2.1 percent per year while operating expenditures outpace average annual revenue
growth by 0.9 percent per year or 3.0 percent.
After including amounts necessary for reserves and capital, there is a shortfall every year in the
forecast. The shortfall is created by a desire to cash finance most capital projects. This is
anticipated and adjustments can be made to address funding levels. It is important to note that
reducing amounts spent on capital should not be viewed as budget cuts (or savings) rather is a
conscious decision to defer spending to future years. The liability still exists. Reserve spending
should be viewed in the same light.
While efforts will continue to focus on how to deliver the same high level of services at lower unit
costs, staff recognizes that revenues will also need to be reviewed. Every opportunity to expand
the sales tax base should continue to be considered. Staff must ensure that revenues are
reviewed for adequacy (fees), efficiency (collections), and efficacy (diversified). New revenue
sources should be researched, discussed, and if warranted, presented to the Village Board for
consideration.
This report will be used as a guide for the development of the FY 2024 Budget and will help shape
the discussion about how the Village adapts to the current and future financial landscape. Staff
seek further input from the Village Board on the operating forecast.
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