Hinsdale officials say they will finish the 2020 fiscal year with a surplus despite tax revenues coming in nearly $1 million under budget.
At a committee of the whole meeting Dec. 3, trustees and members of the village’s finance commission reviewed 2020 economic numbers and the impact that the pandemic has had on the village’s tax receipts.
Sales tax revenue had been forecast to be about $2.95 million for the year, but is now projected to be just under $2.6 million. Village finance director Darrell Langlois said the impact from COVID-19 restrictions has continued to be felt and is likely to continue into 2021.
“We’ve seen the last couple months a decline in sales tax revenue between 3 and 6 percent. I’m planning for a 10 percent decline through the March or April time frame,” Langlois said.
Likewise, food and beverage tax projections have been scaled back from a budgeted $463,000 to $333,000. Revenue from fines is 28 percent off its budget of $482,400, projected instead to be $283,000, a drop attributed to fewer motorists/commuters incurring fewer parking tickets. Total tax revenue, predicted back in January to be around $10.2 million, is now forecast to be about $9.3 million.
Village manager Kathleen Gargano reported a projected $1.9 million revenue shortfall when all sources are taken into account. Those losses have been offset, however, by federal Coronavirus Aid, Relief, and Economic Security (C.A.R.E.S.) Act funding of $828,000 and by $480,000 in cut costs, Gargano said. Holding off on replacing departed personnel comprised a large share of the savings.
“We had two full-time people in the manager’s office leave in January,” Gargano said of vacancies that have not been filled. “It doesn’t mean we don’t need those positions. It just means that we needed to reserve cash as much as possible.”
Individual departments also were asked to trim their budgets.
“Very early on we stopped all discretionary spending,” she said.
The resulting net impact to the village’s general fund was $570,000. The annual transfer to the capital reserve fund was reduced to $625,000 from $1.25 million and $500,000 in annual maintenance was deferred from 2020 to 2021, among other adjustments.
Gargano said the result of those measures has resulted in an estimated 2020 budget surplus $661,000.
“That is a function of the spending that we didn’t do and the deferrals,” she remarked of ending in the black.
In a normal year that surplus would be transferred to the capital fund, Langlois said, but that is not the plan this year.
“This year the recommendation is to keep it right in the general fund due to the uncertainty of COVID next year,” Langlois said. “The goal is to weather through this, continue with village services, and that money right now is going to stay there until we see some kind of turnaround.”
The village is forecast to finish the year with a reserve balance of $5.7 million, which is the equivalent of 33 percent of total expenditures and above the 25 percent target.
At Tuesday’s village board meeting, trustees approved a 2021 operating budget of $20.4 million, 3.5 percent lower that the $21.1 million budgeted for 2020. Village President Tom Cauley said a cautious approach has served the village well during this difficult period.
“Due to the conservative budgeting that the board has done over the past several years, the village can address this $1.9 million shortfall with no real impact to our core services,” he said. “We now have a 33 percent fund balance even though we’ve had a rough year.”
Gargano said the fiscal landscape remains fluid and that the emergence of a vaccine has boosted hopes of a recovery.
“We’re not sure what the long-term impacts are,” she cautioned.
