Springfield is planning almost $23 million in federally funded infrastructure improvements in the fiscal year that begins March 1 as part of a city budget plan flush with cash from COVID-19 relief funds and benefiting from sales and income tax revenue connected with surging consumer demand.
The projects, to be funded from the total $33.8 million the city expects from the American Rescue Plan Act, are among one-time expenditures outlined in the proposed $179 million corporate fund budget for fiscal 2023.
The budget could be approved by the City Council as soon as Feb. 15.
Increases in both sales tax revenue and the local share of the state income tax – all fueled by 2021’s COVID-related enhanced unemployment benefits and skyrocketing consumer spending – will leave the city with an almost $17 million surplus at the end of this month and a record $50 million in reserves.
The situation, according to city budget director Bill McCarty, means that for the new fiscal year, “We’re in good shape. We’re in a good situation now, like a lot of cities, just because of what I call the ‘perfect storm’ of the pandemic, with stimulus money both to the consumer and directed to local governments like ourselves,” he said.
But for the long term, McCarty said, “I don’t want people to think everything is hunky-dory now, because it’s not.”
He noted that the city’s mandated contributions to fund the city’s fire and police pensions continue to increase every year. The required contribution is $28 million in the new budget year.
Beginning in 2018, required pension payments exceeded the $23 million collected annually in property taxes for city government, McCarty said.
“What has been happening for some time now is that pension costs are cannibalizing operations,” he told Illinois Times. “It’s going to get harder and harder to make annual mandated pension payments.”
Springfield and other municipalities have called on the General Assembly to restructure the state’s municipal pension-related debts so the current ramp designed to achieve the mandated 90% funding level by 2040 is extended 10 more years.
The legislature isn’t expected to take action this year, however. And there’s been no interest from the City Council to raise the city’s property tax rate, which hasn’t changed since the 1980s, even though Springfield’s rate is lower than the municipal rate in Urbana, Champaign, Peoria, Normal, Bloomington and Decatur.
Springfield’s overall proposed fiscal 2023 budget of $626.3 million for all funds – including the corporate fund and funds involving City Water, Light & Power – contains $3.5 million for water projects, $8 million for sewer projects, $6 million for road modernization and $12 million for four fire station relocations. Almost $23 million for those projects would come from ARPA dollars.
Included in the ARPA-funded projects would be $530,000 to install 13 aeration units on Lake Springfield to address periodic complaints about odor and taste of city drinking water.
The budget would expand community policing by adding two neighborhood officers and one new school resource officer, fund 100 new in-car computer systems for police cars, prepare for the opening of a new branch and yard-waste drop-off facility, purchase additional street sweepers, finance an expanded demolition program for condemned properties and expand marketing efforts for local events such as History Comes Alive.
Mayor Jim Langfelder said another item of interest to consumers in the budget outline is a “smart” parking meter pilot project that would install about 50 meters that would accept both coins and credit cards and would have a GPS system built in to help drivers find open spots downtown.
A corporate fund balance projected at $33.7 million by the end of February 2023 would serve the city well if the nation’s economy heads into a recession that some economists have predicted sometime in the next few years, according to McCarty.
He noted that federal stimulus money flowing to the city will end in 2022, enhanced unemployment benefits to residents have stopped, and consumer demand likely will level off by the end of fiscal 2023.
But McCarty said a 2021 state law that resulted in higher sales taxes for the city from online purchases will continue to boost city coffers.
Dean Olsen is a senior staff writer for Illinois Times. He can be reached at dolsen@illinostimes.com.
This article appears in 2022 Wedding Issue.
