2024-06-03 - Village Board Committee of the Whole - Agenda Packet
Meeting of the Village of Buffalo Grove
Village Board
Committee of the Whole
June 3, 2024 at 7:30 PM
Fifty Raupp Blvd
Buffalo Grove, IL 60089-2100
Phone: 847-459-2500
1. Call to Order
A. Pledge of Allegiance
2. Special Business
1. Fire Chief Citation Presentation (Trustee Cesario) (Staff Contact: Mike Baker)
2. Comprehensive Plan Update- Visioning (Trustee Weidenfeld) (Staff Contact: Nicole
Woods)
3. 20-Year Water Pro-Forma (Trustee Bocek) (Staff Contact: Chris Black)
4. 5-Year General Fund Forecast (Trustee Bocek) (Staff Contact: Chris Black)
5. Sunset Home Rule and Utility Taxes (Trustee Bocek) (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. Executive Session
5. 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.
Updated: 5/30/2024 11:46 AM Page 1
Information Item : Fire Chief Citation Presentation
Recommendation of Action
Staff recommends presentation.
A presentation of a Fire Chief's Citation to IAFF Local 3177 for the outstanding performance in
cooperation with the Barrington Fire Department Local 3481 by hosting a Fire Ops 101 event.
ATTACHMENTS:
• Fire Chief Citation - 3177 060324 (PDF)
Trustee Liaison Staff Contact
Cesario Mike Baker, Fire
Monday, June 3, 2024
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Buffalo Grove Fire Department
Be it known by all persons, that
the members of
IAFF Local 3177
are hereby recognized for the following outstanding performance in cooperation with the Barrington Fire
Department Local 3481 by hosting a Fire Ops 101 event. Fire Ops 101 is designed to allow elected officials the
opportunity to participate in hands on scenarios, which represent the typical activities which fire department
personnel respond to. Scenarios included engine operations, ladder operations, Emergency Medical Services, and fire
behavior with live fire. The scenarios are similar to the training experiences fire fighters go through when learning to
become a fire fighter.
Therefore, in recognition of this outstanding performance, this Fire Chief Citation is presented on behalf of the Village
of Buffalo Grove, its Officers and Personnel, by the Chief of the Fire Department.
Awarded this 3rd day of June, Two Thousand and Twenty Four
Mike Baker Dane C. Bragg
Fire Chief/EMA Director Village Manager
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Updated: 5/30/2024 11:45 AM Page 1
Information Item : Comprehensive Plan Update- Visioning
Recommendation of Action
Staff recommends discussion.
At the June COW, Staff will present Board with the overall vision for the Comprehensive Plan. The vision
paints a picture of where the Village would like to go in the future in 15-20 years. In addition, staff will also
present four main goals that will help achieve the vision.
ATTACHMENTS:
• COW June 2024 Draft (DOCX)
Trustee Liaison Staff Contact
Weidenfeld Nicole Woods, Community Development
Monday, June 3, 2024
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VILLAGE OF
BUFFALO GROVE
MEMORANDUM
DATE: May 30, 2024
TO: Dane Bragg, Village Manager
FROM: Nicole Woods, Director of Community Development
SUBJECT: Comprehensive Plan - Existing Conditions Report Preview
BACKGROUND
In April, Staff presented the Board with a preview of the Existing Conditions Report (ECR) which
revolved around the following key findings:
• BG’s population and housing stock are growing and diversifying.
• Buffalo Grove is organized around civic, commercial, and industrial nodes.
• Our community is served by strong road networks, limited public transportation options,
robust bike connections, and continued improvements in walkability.
• Buffalo Grove values its natural resources and infrastructure.
• Strategic efforts continue to improve its strong economic development environment, which
includes advanced manufacturing corridors and mixed-use redevelopment centers.
• Dundee corridor is fueled by the two key nodes that bookend the corridor.
• Milwaukee Corridor is anchored by the Deerfield and Milwaukee commercial node and is
influenced by a variety of key factors including: varying land uses, multi-jurisdictions, and
environmental constraints.
In addition to key findings, the Board was also presented with the idea of using mixed-use as a
future land use for certain areas within the Dundee and Milwaukee Corridors. As these areas face
annexation/jurisdiction, environmental, infrastructure, market demands and/or land assembly
challenges in being developed/redeveloped, they need flexibility in their future land uses. To balance
this flexibility, the new development/redevelopment should meet various key principles as shown
below:
• Meet the needs of BG’s growing pop and housing needs
• Exhibit neotraditional livability principles as well as modern planning practices
• Contribute or complement nodes and serve the surrounding land uses
• Maintain or enhance accessibility, infrastructure, and natural resources
• Improve BG’s strong economic environment
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VISON FOR 2050
At the June COW, Staff will present Board with the overall vision for Comprehensive Plan. The vision
paints a picture of where the Village would like to go in the future in 15-20 years. It is a synthesis
of outreach findings coupled with market and development realities.
The vison for 2050 includes neotraditional planning principles, such as welcoming neighborhoods,
walkability, livability, open and green spaces, mix of development and uses, and central gathering
places. At the same time, the vison integrates modern and progressive principles that revolve around
technology, aging-in-place, redevelopment, market demands, infrastructure, and environmentally
sustainability. These dynamics collectively paint a community that is sophisticated and complex by
holding two seemingly opposing characteristics simultaneously.
The road to get to this vision revolves around 4 main goals as shown below:
Goal 1. Nurture Our Assets. Through partnerships, zoning, strategic planning, and related
policies the Village should look to nurture its strongest assets, which include a strong housing market,
excellent schools, open spaces and park districts.
Goal 2: Facilitate Growth and/or Transition for Key Elements and Areas Buffalo Grove
should look to facilitate growth and transition for certain community elements (housing and office
space) as well as key areas (Prairie View, Lake Cook Corridor/Triad of Nodes, Dundee Corridor,
Milwaukee Corridor, and Aptakisic Corridor).
Goal 3: Modernize Planning and Development Tools. The Village should look to modernize
its planning and development tools that include the zoning and building code, appearance guidelines,
and related planning tools such as PUDs and mixed use land use.
Goal 4: Monitor and Lean into Technology and Real Estate Market. Buffalo Grove should
consistently monitor and lean into the ever-evolving technology and real estate market. Unlike other
governmental entities that seemingly ignore advancements and changes in the real estate market,
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Buffalo Grove should seek to integrate them into their own operations and strategic planning as well
as expectations for future development and growth.
NEXT STEPS
Staff will dive deeper into the proposed vison and goals outlined above at the upcoming June COW
meeting and look for any additional feedback. This will include a closer examination of the future of
housing, land use, mobility, economic development, and natural resources within the entire village
context as well as within the key subareas of Dundee, Milwaukee, and Aptakisic Corridors. The
presentation will showcase conceptual ideas and well as more granular visioning site plans. Staff will
be incorporating any key ideas into the final visioning document, existing conditions report, and draft
plan.
The timeline for the project is as follows:
Final PlanDraft PlanVisoning
Existing
Conditions
Report
Spring
2024
Late Spring
2024
Summer
2024
Fall/Winter
2024
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Updated: 5/29/2024 9:34 PM Page 1
Information Item : 20-Year Water Pro-Forma
Recommendation of Action
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 6.3.24 Water PF (PDF)
Trustee Liaison Staff Contact
Bocek Chris Black, Finance
Monday, June 3, 2024
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VILLAGE OF
BUFFALO GROVE
TO: Dane C. Bragg, Village Manager
FROM: Chris Black, Finance Director
DATE: June 3, 2024
RE: FY 2024 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 $200 million in water and sewer capital infrastructure through 2043.
Rate and Consumption History
The Village maintained a water and sewer rate of $1.80/1,000 gallons for twenty-three years (1983
through 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 2023, the Village billed customers for 1.16 billion gallons, a decrease of 28.8 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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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 are 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.
1,060,000
1,080,000
1,100,000
1,120,000
1,140,000
1,160,000
1,180,000
1,200,000
1,220,000
1,240,000
1,260,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Annual Gallons Billed (in thousands)
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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 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:
The fixed fee will be evaluated every five years by utilizing the 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 first occur in 2025 and to be repeated
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Water Main Construction
(In Linear Feet)
Fixed Facility Fee Rate per month
All Single-Family Detached, Single-Family Attached
Residential/Governmental/Institutional
$17.39
Multi-Family, Commercial/Industrial Based on Meter
Size
1" meters or less $17.39
1.5" meters $22.02
2" meters $45.17
3" meters $115.68
4" meters $180.68
6” meters $199.20
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every five years thereafter. The fixed facility fee on single family residential will be $19.13 in 2025
based on a 10 percent rate increase. As of April 2024, the five-year CPI-U has increased 22.6 percent,
which would result in a fixed facility fee of $21.32. Staff will recommend a new fixed facility rate to
the Village Board in October as part of the 2025 fee schedule.
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 $8.25.
Water and Sewer Fund Financials
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, $35.5
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 2021 through 2025, the Village has programmed $29.7 million in water and sewer capital
projects. The Village completed approximately $1.9 million in capital projects in FY 2023, a year the
village decided to do a lower volume of projects due to the high construction prices. The Village will
utilize water and sewer reserves from 2024 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 from 2037 through 2043, while also supporting over $60.2 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.
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WATER & SEWER FUND
BUDGET YEAR 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043
Beginning Cash 14,897,911 12,596,117 9,423,470 7,299,123 1,895,016 1,551,195 2,086,787 21,537,923 14,021,722 8,299,477 22,277,924 15,565,373 9,524,831 4,231,358 4,351,680 4,195,986 4,961,260 6,214,576 7,041,512 7,701,900
Water and Sewer Revenue
Sale of Water 7,770,744 8,507,393 8,852,122 9,209,161 9,578,512 9,960,175 10,354,150 10,772,749 11,203,659 11,646,880 12,114,725 12,594,882 13,099,662 13,629,066 14,170,781 14,737,120 15,328,082 15,943,668 16,583,877 17,938,165
Fixed Facility Fees 2,500,000 2,750,000 2,750,000 2,750,000 2,750,000 2,750,000 3,025,000 3,025,000 3,025,000 3,025,000 3,025,000 3,327,500 3,327,500 3,327,500 3,327,500 3,327,500 3,327,500 3,327,500 3,327,500 3,327,500
Late Charges 158,600 161,000 163,400 165,900 168,400 170,900 173,500 176,100 178,700 181,400 184,100 186,900 189,700 192,500 195,400 198,300 201,300 204,300 207,400 213,700
Village Sewer Use Fees 1,886,000 1,966,500 2,047,000 2,127,500 2,208,000 2,300,000 2,392,000 2,484,000 2,587,500 2,691,000 2,794,500 2,909,500 3,024,500 3,151,000 3,277,500 3,404,000 3,542,000 3,680,000 3,829,500 4,140,000
Series 2020 Bonds
Series 2030 Bonds 26,000,000
Series 2033 Bonds 20,000,000
ARPA Funds
Other Charges & Fees 65,379 71,742 69,444 60,959 60,606 66,616 71,919 69,444 60,959 60,606 66,616 71,919 69,444 60,959 60,606 66,616 71,919 69,444 60,959 60,606
Investment Revenue 148,980 125,960 94,230 72,990 18,950 15,510 20,870 215,380 140,220 82,990 222,780 155,650 95,250 42,310 43,520 41,960 49,610 62,150 70,420 77,020
Total Revenue 12,529,703 13,582,595 13,976,196 14,386,510 14,784,468 15,263,201 42,037,439 16,742,673 17,196,038 37,687,876 18,407,721 19,246,351 19,806,056 20,403,335 21,075,307 21,775,496 22,520,411 23,287,062 24,079,656 25,756,991
Operating Expenses
Water Department 4,642,637 4,828,409 4,917,309 5,014,293 5,149,406 5,242,695 5,344,209 5,443,996 5,552,106 5,698,592 5,803,507 5,916,904 6,028,839 6,149,368 6,308,549 6,426,443 6,553,110 6,678,613 6,793,674 7,081,863
Sewer Department 951,334 972,739 994,626 1,017,005 1,039,888 1,063,285 1,087,209 1,111,671 1,136,684 1,162,259 1,188,410 1,215,149 1,242,490 1,270,446 1,299,031 1,328,259 1,358,145 1,388,703 1,419,949 1,419,949
Total Operating Expenses 5,593,971 5,801,148 5,911,935 6,031,298 6,189,294 6,305,980 6,431,418 6,555,667 6,688,790 6,860,851 6,991,917 7,132,053 7,271,329 7,419,814 7,607,580 7,754,702 7,911,255 8,067,316 8,213,623 8,501,812
Capital Expenses
Capital Projects 5,767,000 7,000,000 6,500,000 10,000,000 5,100,000 5,100,000 12,500,000 12,500,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 6,000,000 6,600,000 6,930,000 7,000,000 8,000,000 9,000,000 9,000,000
Capital Equipment 50,000 231,530 243,110 255,270 268,030 281,430 295,500 310,280 325,790 342,080 359,180 377,140 396,000 415,800 436,590 458,420 481,340 505,410 518,045 518,045
Water Meter Debt Service 702,186 753,245 807,270 864,413 924,841 384,828 - - - - -
IEPA Loan 26,128 26,128 26,128 26,128 26,128 26,128 26,128 26,128 26,128 26,128
Series 2020 Debt Service 1,161,950 1,121,950 946,950 948,700 946,200 947,075 946,475 947,700 948,175 947,900 946,875 947,600
Series 2022 Debt Service 520,262 802,941 638,450 629,609 629,996 629,768 641,035 660,000 660,000 660,000 660,000 660,000 1,253,000 1,258,000 1,386,431 660,000 660,000 660,000 660,000
Series 2030 Debt Service 684,646 2,189,200 2,190,600 2,190,000 2,192,400 2,192,600 2,190,600 2,191,400 2,189,800 2,190,800 2,189,200 2,190,000 2,193,000 2,193,000
Series 2033 Debt Service 594,669 1,873,000 1,871,400 1,873,200 1,873,200 1,876,400 1,872,600 1,872,000 1,874,400 1,874,600 1,874,600
Total Capital Expenses 8,227,526 9,935,794 9,161,908 12,724,120 7,895,195 7,369,229 15,093,784 16,633,308 15,150,693 15,760,777 17,031,455 17,048,740 16,712,800 11,738,400 12,489,221 12,111,820 12,202,540 13,229,810 14,245,645 13,585,645
Operating Transfers
Water Department - Tax Abatement 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000
Reimburse General Fund 830,000 838,300 846,700 855,200 863,800 872,400 881,100 889,900 898,800 907,800 916,900 926,100 935,400 944,800 954,200 963,700 973,300 983,000 780,000 780,000
Total Operating Transfers 1,010,000 1,018,300 1,026,700 1,035,200 1,043,800 1,052,400 1,061,100 1,069,900 1,078,800 1,087,800 1,096,900 1,106,100 1,115,400 1,124,800 1,134,200 1,143,700 1,153,300 1,163,000 960,000 960,000
Revenues over (under) Expenses (2,301,794) (3,172,647) (2,124,347) (5,404,108) (343,821) 535,592 19,451,137 (7,516,202) (5,722,245) 13,978,447 (6,712,551) (6,040,542) (5,293,473) 120,321 (155,694) 765,274 1,253,316 826,936 660,388 2,709,534
Unreserved Ending Cash 12,596,117 9,423,470 7,299,123 1,895,016 1,551,195 2,086,787 21,537,923 14,021,722 8,299,477 22,277,924 15,565,373 9,524,831 4,231,358 4,351,680 4,195,986 4,961,260 6,214,576 7,041,512 7,701,900 10,411,434
Required Working Cash*1,398,493 1,450,287 1,477,984 1,507,825 1,547,324 1,576,495 1,607,855 1,638,917 1,672,198 1,715,213 1,747,979 1,783,013 1,817,832 1,854,954 1,901,895 1,938,676 1,977,814 2,016,829 2,053,406 2,125,453
Est Gallons Billed (in thousands)1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000 1,150,000
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Updated: 5/29/2024 1:14 PM Page 1
Information Item : 5-Year General Fund Forecast
Recommendation of Action
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.
ATTACHMENTS:
• Five Year General Fund Forecast 2025-2029 (DOCX)
Trustee Liaison Staff Contact
Bocek Chris Black, Finance
Monday, June 3, 2024
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Village of Buffalo Grove
A Financial Assessment of General Fund
Revenues and Expenditures
Village of Buffalo Grove - General Fund
Financial Forecast
FY 2025 – FY 2029
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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.
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
0.8 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.
The intent of the Five-
Year Operating Forecast
is to evaluate resource
allocations to ensure the
proper funding levels for
services, capital,
infrastructure and
maintaining reserves.
OVERVIEW AND SUMMARY
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FORECAST METHODOLOGIES AND ASSUMPTIONS
REVENUES
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.
EXPENDITURES
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 2023 and the 2024 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 11.4 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 base d
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.
ECONOMIC OUTLOOK
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.
ECONOMIC INDICATORS - NATIONAL
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 2024) Consumer Price Index is at 3.4 percent over
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that same month the prior year. This increase is 1.5 percent lower than the twelve-month period
ending in April 2023.
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 lo st 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.
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.
ECONOMIC INDICATORS - LOCAL
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. For the 2022 Levy (Collected 2023), total
assessed value increased 4.16 percent. Lake County values increase 1.56 percent while
Cook County property values increased by 14.44 percent. With data being available solely
for Lake County, the anticipated increase for the 2023 levy (Collected 2024) is 5.7 percent.
See the chart below to see the ten-year, combined county history of equalized assessed
values.
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• State of Illinois Legislation. As the State of Illinois has experienced financial difficulties
over the last decade, staff continues to monitor legislative discussions that could have a
direct financial impact on Village revenues. The most imminent threat to municipal
revenues is a new law recently approved by the General Assembly eliminating the
statewide grocery tax starting January 1, 2026. The new law also provides municipalities
authority to impose a grocery tax locally effective on or after the elimination of the
statewide tax. The This tax provides the village an estimated $1.4 million annually.
• 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
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. 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 in the Lake Cook
TIF. With the formation of the Dundee Road TIF, the Bison Crossing development, which
will include a Tesla sales and service center and luxury residential and commercial outlots,
has started 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
$311 million in capital assets, excluding depreciation, across all activities.
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2014 -2023
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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.
GENERAL FUND FIVE-YEAR FORECAST – OPERATING
Revenue 2025 2026 2027 2028 2029 Growth
Property Taxes
17,115,900
17,458,218
17,807,382
18,163,530
18,526,801 1.02
Income & Use Taxes
8,459,800
8,671,295
8,888,077
9,110,279
9,338,036 1.025
State Sales Tax
9,464,500
9,701,113
9,943,640
10,192,231
10,447,037 1.025
Home Rule Sales Tax
6,928,300
7,066,866
7,208,203
7,352,367
7,499,415 1.02
Real Estate Transfer Tax
1,009,800
1,029,996
1,050,596
1,071,608
1,093,040 1.02
Telecommunications Tax
720,000
720,000
720,000
720,000
720,000 1.00
Prepared Food and Beverage Tax
918,000
936,360
955,087
974,189
993,673 1.02
Utility Tax-Electric/Natural Gas
2,650,000
2,650,000
2,650,000
2,650,000
2,650,000 1.00
Licenses
411,400
411,400
411,400
411,400
411,400 1.00
Building Revenue & Fees
1,275,400
1,288,154
1,301,036
1,314,046
1,327,186 1.01
Intergovernmental Revenue-Local
383,600
391,272
399,097
407,079
415,221 1.02
Fines & Fees-Police & Fire
2,476,645
2,501,411
2,526,426
2,551,690
2,577,207 1.01
Storm Water Management Fees
1,140,000
1,140,000
1,140,000
1,140,000
1,140,000 1.00
Operating Transfers
838,300
855,066
872,167
889,611
907,403 1.02
Cable Franchise Fees
735,000
735,000
735,000
735,000
735,000 1.00
Miscellaneous Revenue
1,450,700
1,465,207
1,479,859
1,494,658
1,509,604 1.01
Total Revenues
55,977,345
57,021,358
58,087,971
59,177,688
60,291,023
Annual Increase 1.9% 1.9% 1.9% 1.9% 1.9%
Expenditure 2025 2026 2027 2028 2029 Growth
Personal Services 25,704,563 26,475,699 27,269,970 28,088,070 28,930,712 1.03
Personal Benefits 12,506,747 12,881,950 13,268,408 13,666,460 14,076,454 1.03
Operating Expenses 4,057,200 4,138,344 4,221,111 4,305,533 4,391,644 1.02
Insurance & Legal Services 1,817,545 1,890,246 1,965,856 2,044,490 2,126,270 1.04
Commodities 390,371 400,131 410,134 420,387 430,897 1.025
Maintenance & Repairs 3,894,995 3,992,370 4,092,179 4,194,483 4,299,346 1.025
All Other Expenses 4,684,122 4,730,964 4,778,273 4,778,273 4,826,056 1.01
Total Expenditures 53,055,543 54,509,703 56,005,932 57,497,697 59,081,378
Operating Surplus/(Shortfall)
2,921,802
2,511,655
2,082,040
1,679,991
1,209,645
Annual Increase 2.7% 2.7% 2.7% 2.7% 2.8%
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FORECAST STRUCTURE
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 (with state and
local motor fuel taxes and grants), and projects in the Capital Improvement Plan. All projects
submitted for inclusion in the FY 2024 – FY 2028 CIP have been added to this report. After
including these transfers, the cumulative fund shortfall at the end of FY 2029 is estimated to be
nearly $140.7 million.
GENERAL FUND FIVE-YEAR FORECAST – OPERATING WITH CAPITAL
Revenue 2025 2026 2027 2028 2029 Growth
Property Taxes
17,115,900
17,458,218
17,807,382
18,163,530
18,526,801 1.02
Income & Use Taxes
8,459,800
8,671,295
8,888,077
9,110,279
9,338,036 1.025
State Sales Tax
9,464,500
9,701,113
9,943,640
10,192,231
10,447,037 1.025
Home Rule Sales Tax
6,928,300
7,066,866
7,208,203
7,352,367
7,499,415 1.02
Real Estate Transfer Tax
1,009,800
1,029,996
1,050,596
1,071,608
1,093,040 1.02
Telecommunications Tax
720,000
720,000
720,000
720,000
720,000 1.00
Prepared Food and Beverage Tax
918,000
936,360
955,087
974,189
993,673 1.02
Utility Tax-Electric/Natural Gas
2,650,000
2,650,000
2,650,000
2,650,000
2,650,000 1.00
Licenses
411,400
411,400
411,400
411,400
411,400 1.00
Building Revenue & Fees
1,275,400
1,288,154
1,301,036
1,314,046
1,327,186 1.01
Intergovernmental Revenue-Local
383,600
391,272
399,097
407,079
415,221 1.02
Fines & Fees-Police & Fire
2,476,645
2,501,411
2,526,426
2,551,690
2,577,207 1.01
Storm Water Management Fees
1,140,000
1,140,000
1,140,000
1,140,000
1,140,000 1.00
Operating Transfers
838,300
855,066
872,167
889,611
907,403 1.02
Cable Franchise Fees
735,000
735,000
735,000
735,000
735,000 1.00
Miscellaneous Revenue
1,450,700
1,465,207
1,479,859
1,494,658
1,509,604 1.01
Total Revenues
55,977,345
57,021,358
58,087,971
59,177,688
60,291,023
Annual Increase 1.9% 1.9% 1.9% 1.9% 1.9%
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Expenditure 2025 2026 2027 2028 2029 Growth
Personal Services 25,704,563 26,475,699 27,269,970 28,088,070 28,930,712 1.03
Personal Benefits 12,506,747 12,881,950 13,268,408 13,666,460 14,076,454 1.03
Operating Expenses 4,057,200 4,138,344 4,221,111 4,305,533 4,391,644 1.02
Insurance & Legal Services 1,817,545 1,890,246 1,965,856 2,044,490 2,126,270 1.04
Commodities 390,371 400,131 410,134 420,387 430,897 1.025
Maintenance & Repairs 3,894,995 3,992,370 4,092,179 4,194,483 4,299,346 1.025
All Other Expenses 4,684,122 4,730,964 4,778,273 4,778,273 4,826,056 1.01
Total Expenditures 53,055,543 54,509,703 56,005,932 57,497,697 59,081,378
Operating Surplus/(Shortfall)
2,921,802
2,511,655
2,082,040
1,679,991
1,209,645
Annual Increase 2.7% 2.7% 2.7% 2.7% 2.8%
Capital Items & Reserves 2025 2026 2027 2028 2029
Capital - Vehicles
2,044,000
1,810,000
1,814,000
1,560,000
1,725,000
Capital - Facilities
11,008,400
8,129,200
2,754,000
16,260,000
500,000
Capital - Technology
360,000
215,000
265,000
275,000
200,000
Capital - Stormwater
655,000
100,000
750,000
655,000
200,000
Street Program
15,000,000
15,000,000
15,000,000
15,000,000
15,000,000
Capital Reserve Funding
2,895,731
2,895,731
2,895,731
2,895,731
2,895,731
Total Capital
31,963,131
28,149,931
23,478,731
36,645,731
20,520,731
Total Fund Surplus/(Shortfall)
(29,041,329)
(25,638,276)
(21,396,691)
(34,965,740)
(19,311,086)
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. The village has added
a significant amount to capital reserves due to strong revenue performance over the last three
fiscal years.
Over the next five years it is anticipated that $70.1 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.
2025 2026 2027 2028 2029
Street Program 14,020,000 14,020,000 14,020,000 14,020,000 14,020,000
Total Unfunded/Debt 14,020,000 14,020,000 14,020,000 14,020,000 14,020,000
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RESERVES
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 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 2023 is $17.25 million
or 35 percent of the FY 2024 operating budget. The Village also has designated an additional
$1,270,000 for revenue stabilization.
GENERAL FUND REVENUES
Approximately 78 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.
PROPERTY TAX
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
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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.
Property Tax Dollar Distribution
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 $1,925,276,664
representing a 5.7 percent increase from the previous year. The Lake County portion of the
Village’s EAV increases 6.5 percent year over year.
Corporate Levy -
Public Safety
53.6%
Pension Levies, 44.5%
Debt Service, 2.0%
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Equalized Assessed Valuation
SALES TAX
The growth for both the base (2.5%) and home rule sales taxes (2.5%) is below the current level
of inflation. 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.
Base Sales Tax
0
500
1,000
1,500
2,000
2,500
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
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Equalized Assessed Valuation -Lake and Cook Counties
2014 -2023
Cook County Total EAV Lake Couty
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
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Home Rule Sales Tax
The Village’s strives to diversify its retail tax base so that no one sector is overly exposed to
economic fluctuations. The following chart reflects the Illinois Department of Revenue Standard
Industry Codes (SIC) for sales tax remitted to the Village.
Retail Sales Tax by Sector
INCOME TAX
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 4.95 percent of net income. The rate was 3.75 percent beginning January 1, 2015 to December
31, 2017. 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. Wh en the state rate increased to
the current rate, the increase was not included in the distribution making the effective per capita
distribution to municipalities slightly above six percent.
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
General Merchandise
1%
Food
19%
Drinking and Eating
Places
7%Apparel
1%
Furniture,HH, & Radio
10%
Lumber, Bldg.,
Hardware
20%
Automotive & Filling
Stations
5%
Drugs & Misc. Retail
18%
Agriculture &
All Others
19%
Manufacturers
0%
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The Village’s unemployment rate as of April 2024 is 3.6 percent, which bests the state of Illinois
(3.8 percent) and is just above the U.S. (3.5 percent). Income receipts performed very well in
2023 and for the first four months of 2024 due to low unemployment and strong corporate
profits.
Income Tax
PREPARED FOOD AND BEVERAGE TAX
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.
TELECOMMUNICATIONS TAX
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 18.5
percent in FY 2022 from $1.3 million in FY 2019. The forecast calls for no change over the
remainder of the plan.
UTILITY USE TAX (NATURAL G AS & ELECTRICITY)
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.
REAL ESTATE TRANSFER TAX
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. In FY 2022, tax
receipts totaled $2.0 million due to the strong real estate market, which resulted in a high volume
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
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of sales and increasing sales prices. Revenue declined to $1.09 million in 2023 with the slowing
of the real estate market.
Real Estate Transfer Tax
EXPENDITURE REVIEW
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 2024 the distribution of General Fund expenditures is shown in the table below.
EXPENDITURE DISTRIBUTION
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Personal Services
44%
Personal Benefits
22%
Operating Expenses
7%
Insurance & Legal
3%
Commodities
1%
Maintenance &
Repairs
6%
All Other Expenses
8%
Capital Reserve
Transfers
6%
Capital Improvement
Plan
3%
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PERSONAL SERVICES
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 217 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.
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 2024
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.
PERSONAL B ENEFITS
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 2024. 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 2024 or 12.3 percent of General Fund
operating expenditures.
INSURANCE
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.
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COMMODITIES
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.
MAINTENANCE & REPAIR
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.
GENERAL FUND CAPITAL RESERVES
Capital Reserves
Included in the transfers are $9.6 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.
Capital Projects
There is $126.3 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 pro jects are
included in the FY 2024 annual budget. The amount of the capital reserve funding is not sufficient
to meet the needs of certain CIP program areas.
FINANCIAL RESULTS
Operating Budget
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 1.9 percent per year while operating expenditures outpace average annual revenue
growth by 0.8 percent per year or 2.7 percent.
Impact of Transfers and Capital Projects
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
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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 2025 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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Updated: 5/30/2024 8:30 AM Page 1
Information Item : Sunset Home Rule and Utility Taxes
Recommendation of Action
Staff recommends discussion.
In 2004, the Village Board adopted Ordinance No. 2004-16 amending Chapter 3.40 of the Municipal
Code to increase the Home Rule Sales Tax by 0.5 percent to 1.0 percent effective July 1, 2004. Within
the recitals of the ordinance was a requirement that by January 2006 and each January thereafter, a
review is to be undertaken to determine if the rate should remain at the current level.
ATTACHMENTS:
• BOT Memo 6.3.24 Sunset (DOCX)
Trustee Liaison Staff Contact
Bocek Chris Black, Finance
Monday, June 3, 2024
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VILLAGE OF
BUFFALO GROVE
TO: Dane C. Bragg, Village Manager
FROM: Chris Black, Director of Finance
DATE: June 3, 2024
RE: Home Rule Sales and Utility Taxes – Sunset Provisions
In 2004, the Village Board adopted Ordinance No. 2004-16 amending Chapter 3.40 of
the Municipal Code to increase the Home Rule Sales Tax by 0.5 percent to 1.0 percent
effective July 1, 2004. Within the recitals of the ordinance was a requirement that by
January 2006 and each January thereafter, a review is to be undertaken to determine if
the rate should remain at the current level. The 0.5 percent increase in the Home Rule
Sales Tax is budgeted at approximately $3.4 million in the 2024 budget.
In 2010 (effective 2011), the Village Board adopted ordinances for the collection of Utility
Use taxes on electricity and natural gas. Within the recitals of the ordinances were
requirements that a review is to be undertaken to determine if the rate should remain at
the current level. The 2024 budget revenue for utility taxes totals $2.7 million.
Staff recommends the continuation of the 0.5 percent Home Rule Sales Tax, Municipal
Natural Gas Use Tax, and Municipal Electricity Use Tax for fiscal year 2025. The total of
$6.1 million or 11.0 percent of the General Fund revenue budget is subject to sunset
provisions. Based on the current service levels, lack of sustainable surpluses in other
revenue streams, and no new sources of revenue, staff recommends no changes to Home
Rule Sales Tax or the Electricity or Natural Gas Use Taxes.
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