Budget Message / Highlights - Metropolitan Water Reclamation ...

METROPOLITAN WATER RECLAMATION DISTRICT OF GREATER CHICAGO
FINANCIAL NARRATIVE (continued)
2009 BUDGET
of new assets or enhancements of existing capital assets. Inventory is accounted for on the purchase method for budgetary
purposes and on the consumption method for GAAP financial reporting.
The budget is prepared using a cash basis of accounting for revenue recognition and an accrual basis for recording
expenditures as prescribed by Illinois Compiled Statutes. Revenues are recognized when received in cash, and expenditures
are recorded at the time when the liability is incurred, except for principal and interest on long-term debt, compensated
absences, claims, judgments and arbitrage which are recognized when due and payable.
Encumbrance accounting is used in the budgetary process for all funds. Appropriations lapse at year-end for the Corporate,
Stormwater Management, Reserve Claim, Construction, Retirement, and Bond and Interest Funds. Appropriations for the
Capital Improvements Bond Fund use a full encumbrance (obligation) method of budgetary accounting, which means that
appropriations lapse at year-end only to the extent of the unencumbered balances. The appropriation for the Capital
Improvements Bond Fund is adjusted to carry forward the open value of encumbrances from the prior year.
The MWRDGC is a special district government created by the State of Illinois. Its powers and authority in regard to revenue
sources are generally restricted to those powers granted by applicable state
statutes. The following exhibits, 1 through 6, are derived from the summary of
revenue and expenditures found on pages 82-84 of the 2009 Budget and similar
summaries in prior years' budgets. This is a summary of all District funds.
Exhibit 1
Millions Net Tax Sources
TAX SOURCES
$300
$275
The main source of revenue for the District is ad valorem property taxes. The
authority to levy property taxes for the various funds generally specifies a tax rate
limit per hundred dollars of property value, which when applied, yields a
maximum amount of money which can be levied or collected against property
owners. All District funds, with the exception of the District's Capital
Improvements Bond Fund, derive their revenues primarily from property taxes.
Approximately 25.3 percent of the 2009 appropriation is supported by property
taxes. Taxes levied in one year are collected in the next year and Working Cash
Funds for the Corporate, Construction and Stormwater Management Funds
$250
$225
$200
$175
$150
$125
$100
$75
$50
$25
provide temporary financing while awaiting property tax receipts. Net Tax
$0
Sources displayed in Exhibit 1 reflect only property tax revenue for the
2005 2006 2007 2008 2009
Corporate, Construction and Stormwater Management Funds. The estimate for
uncollectible taxes for 2009 is 3.5 percent, based on annual review of prior years
tax collections.
A personal property replacement tax provides income tax revenue from
corporations, partnerships and the invested capital of public utilities to replace the
personal property taxes, which were once received from these sources. These
revenues are received directly from the State of Illinois. Revenue from this source
is estimated at $43.5 million for 2009 which is a slight increase from the 2008
budget estimate of $43.0 million. However, this revenue is expected to stabilize as
a reflection of the slowing Illinois economy.
Exhibit 1 presents revenue from net tax sources for the years 2005 - 2009. Due to
the enactment of Tax Cap laws in 1995, future increases in property tax levies,
except for debt service and the Stormwater Management Fund, are limited to the
lesser of 5 percent or the change in the national Consumer Price Index (CPI) plus
new property. For 2009, an increase of 4.2 percent is forecast, consisting of an
estimated 4.0 percent change in the CPI plus an estimated 0.2 percent for new
development and newly annexed properties. Impacts of the Tax Cap laws are
Exhibit 2
Millions
$60
$50
$40
$30
$20
$10
Grants and Loans
$0
discussed in the fund narratives and budget foreword.
2005 2006 2007 2008 2009
Estimated Projected
GRANTS and LOANS
Federal and state grants, and state loans contribute to finance the District's capital programs. For 2009, $33.4 million in State
Revolving Fund (SRF) loans is budgeted. In the past the District has been successful in obtaining some grant funding and will
continue to pursue grants for additional TARP projects. Exhibit 2 shows the grants and loans for the years 2005 - 2009.
The District anticipates receiving an annual allocation of at least $30 million in State Revolving Fund loans, based on the
current capitalization level of the state fund and repayment trends.
Estimated Projected
78
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