2018 OP Fall/Winter

FINANCE NEWS

FINANCE NEWS

Budget Process

The Board of Trustees has a set policy of maintaining at least 20 percent financial reserves (or fund balance policy) at all times. Keeping healthy reserves has allowed the village to consistently earn high bond ratings, enabling the village to borrow money at lower interest rates and keep insurance premiums lower. The diversified tax base we enjoy in Orland Park has a mixture of residential, commercial and light industrial, along with a significant retail sales tax source in our stores, restaurants and other sales oriented businesses. This has allowed the Village Board to continuously offer the same services, year after year, without depleting its fund balance policy, and – more importantly – without raising the tax levy. The tax levy is the amount of money the village requests Cook County to collect on our behalf. The village has not asked the county to raise its levy for eight years in a row. As you may have read, retail sales have been slumping over the past few years. Known to some as the “Amazon Effect” – online sales hurting brick and

mortar stores. The overall trend seems to indicate that we should expect less revenue from retail sales taxes than we were once accustomed to receiving. With the closing of Sears, Carson Pirie Scott, Toys ‘R Us and Babies ‘R Us, that decrease is magnified. While we are very excited about the recent announcement that Von Maur will be soon occupying the former Carson’s spot, it will be some time before we see that revenue coming in to the village. Realistically, we have to plan for the possibility that retail stores may not provide the same revenue that they once did. Just as families create household budgets based on the income you expect to make for the year, our Board of Trustees goes through a similar process each year, beginning in late summer or early fall. The Village of Orland Park Finance Department projects anticipated revenues for the following year, and then the board decides whether to raise any new revenue (i.e. increasing taxes). Finally, our village departments are then asked to bring a budget to the board that fits within those guidelines.

This year, it was obvious that the village could not spend the same amount of money it spent last year without raising new revenue or depleting its reserves below the established fund balance policy. Despite the fact that the village portion of a resident’s taxes accounts for less than 7% of the total bill, the majority of the Village Board was not comfortable in raising the tax levy. Therefore, the only way to maintain the fund balance policy was to cut spending. We directed the village manager to bring to the board cuts that would not impact public safety or core village services. The current proposed budget maintains our fund balance policy, does not raise taxes and maintains public safety and core services. Unfortunately, some programs and services had to be cut. Other services may take longer to deliver, but will still be offered. The Village Board is committed to providing the best quality of life possible to residents of Orland Park, while doing so in an efficient and economically responsible way. Every year, we welcome your input during the entire budget process.

IN DECEMBER OF EACH YEAR, THE VILLAGE BOARD FORMALLY APPROVES BALANCED OPERATING AND CAPITAL BUDGETS FOR THE FOLLOWING YEAR.

The village utilizes the target based budget method for operating funds; therefore, the budget process begins with the calculation of available sources. Fixed costs are applied against these available sources and the net amount available is allocated to the Village’s operating departments to fund variable operating costs. Available sources include fund balance remaining after setting aside Board authorized reserve amounts, as well as revenue projected for the new fiscal year. The village’s budget policy is to estimate revenues conservatively and to maintain a spending level less than or equal to current year resources. The issuance of short or long term debt will only occur if needed to fund long-term capital projects and will not be utilized to fund the village’s operating budget. The village continues to maintain reserves in its operating funds that

meet or exceed Board approved fund balance and reserve policy levels. For more information about the Village of Orland Park budget process, please visit www.orlandpark.org.

• Budget Adoption (December 4, 2018)

• Operating Budget Hearings • Capital Budget Hearings • Revenue Hearing

NOV./ DEC.

• Budget Team reviews budget priorities with officials. This is the point at which village-wide priorities of officials are captured and included in the discussions

SEPT./ OCT.

“Just as families create household budgets based on the income you expect to make for the year, our Board of Trustees goes through a similar process each year.... The Village Board is committed to providing the best quality of life possible to residents of Orland Park, while doing so in an efficient and economically responsible way.”

• Budget Team reviews results with departments

AUGUST

• Pre-budget committee meetings with Budget Team,

department directors and village officials

JULY

2019

Trustee Michael Carroll, Chair FINANCE COMMITTEE

MAY/ JUNE

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| FALL/WINTER 2018 | WWW.ORLANDPARK.ORG |

WWW.ORLANDPARK.ORG | FALL/WINTER 2018 |