Budget Message / Highlights - Metropolitan Water Reclamation ...

METROPOLITAN WATER RECLAMATION DISTRICT OF GREATER CHICAGO
2009 BUDGET
Budget Message / Highlights
Real Estate Tax Levies
The District's primary source of operating revenue is ad valorem real estate taxes. The passage of the Property Tax Extension
Limitation Act, Tax Cap, in 1995 limited future increases in property tax levies, except debt service, to the lesser of 5 percent or
the change in the national consumer price index (CPI) plus allowable increases for new property. The District made significant
reductions in operating expenditures in 1995 and 1996 to absorb the initial impact of revenue reductions due to the Tax Cap. Since
then, restructuring of the Construction Fund projects, a healthy fund balance, interest transfers, and reduced property tax funding
requirements for the Working Cash Funds allowed controlled growth in the Corporate Fund, within the limits of the Tax Caps.
Since 1997, the CPI has averaged 2.7 percent and the growth in Corporate Fund expenditures has increased about 2.9 percent
annually. This gap between CPI and expenditures is within the additional growth of new property tax base, and other nonproperty
tax revenues. Matching the growth in expenditures to revenue was primarily the result of aggressively reducing nonoperations
related expenditures. The 2009 Corporate Fund budget continues to take advantage of accumulated surpluses by
reinvesting in short term upgrade projects and catching up on deferred maintenance.
Decisions by the Illinois Property Tax Appeals Board (PTAB) and
Property Tax Refunds - All Funds
other property tax refunds ordered by the circuit courts have reduced
25
District tax revenues by $151.4 million since 1994. While the
through Sept. 2008
allowance for loss in collections of taxes has provided for a good 20
portion of this, the net effect is that total collections have been less
than expected. To provide for the refunds, the rate for loss in 15
collection was raised to 3.5 percent in 2003 from the 3.0 percent
10
used for the 2002 levy. This loss in collection factor will continue to
be used through 2009.
5
Cook County reassesses property values on a triennial cycle, rotating
0
from North Suburban to South Suburban to City of Chicago.
Historically, when the City is reassessed, there are a larger number
of assessment appeals that must be resolved before the final
Equalized Assessed Valuations can be set, tax rates calculated and property tax bills prepared. In Springfield, The Governor
returned House Bill 664 to the legislature on September 20, 2007 with an amendatory veto. The bill extended and modified the
7 percent cap on increases to residential Equalized Assessed Valuation (EAV) which expired in 2006. The amendatory veto
was overridden on October 12, 2007. With the Cook County Assessor’s office waiting for a resolution of this matter before
printing the second installment bills, the 2006 levy collectible in 2007 were due December 3, 2007. That delay shifted some
tax receipts into 2008, effectively increasing revenues recognized in 2008.
Non-Property Tax Revenues - Fund Balances
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Economic growth in this region has been reflected in increased non-property tax revenues that help support District operations
and fund balance levels. While the District is primarily supported by property taxes, prior years’ strong levels of investment
interest income, personal replacement property tax and user charge revenues significantly cushioned the impacts of the Tax
Cap Law restrictions on tax levy increases.
Slow increases in certain non-property tax revenues were anticipated in the conservative revenue estimates used for the 2009
Budget. Before 2004, all net assets appropriable had been reappropriated as revenue for the subsequent year. Beginning in
2004, a portion of the projected net assets remained unappropriated to provide for a fiscally responsible fund balance. A
Corporate Fund balance within the $45 to $55 million range, or 12 to 15 percent of appropriations, is viewed by District
management and the financial markets as necessary to maintain financial stability and sustain us through economic
uncertainties. This fund balance level is consistent with recommendations of the Government Finance Officers Association.
This is an integral part of a long-term plan that also includes reductions of future expenditures to better match current revenues.
Revenues and expenditures are closely monitored, so that favorable variances in revenues are recognized and made available
for expenditure or unfavorable revenue variances lead to appropriate restrictions.
Investment interest income in 2009 is projected to be $27.4 million compared to an estimated $32.3 million in 2008. The actual
revenue for 2007 was $46.2 million. The Treasurer is statutorily limited to investments in U. S. Government debt and high
quality, short term bonds. The variation in investment income is largely due to the decreases in short-term interest rates, and
Million $
17
17