Clarendon Hills Home Rule Informational Session

1. Clarendon Hills Home Rule Informational Session February 15, 2012

2. Home Rule Discussion in Clarendon Hills

3. Current Financial Condition of the Village • AAA Rating given in 2011 • Only 2% of municipalities in Illinois have attained a AAA rating from Moody’s, Fitch or S&P. • Until now have maintained at least 40% of annual costs in reserve

4. General Fund Expenditure Summary

5. *Not Including POC Firefighters

6. Fire Costs Vs. Calls

7. Contracting and Shared Services • Engineering • Building/plumbing/electrical inspections • Plan reviews • Information technology • Various Public Works services • Shared 9-1-1 dispatch • Regional major crimes investigations • Automatic mutual fire aid agreement (Hinsdale) • Library shared services: IT, payroll, tax levy, snow removal, phone • Liability and health insurance pools participation • Exploring shared police service model with Hinsdale

8. Budget Reductions • Total Budget Reductions since FY 08-09 = $1.98 million; including $1.1 million in cuts, $904,000 in deferrals • This year’s budget process is under way and will include additional reductions

9. Budget Reductions Elimination of positions in Community Development, Finance, and Police Departments Elimination of out-of-state employee training/benefits, reduction in other training Eliminated all non-emergency OT Establishment of new compensation plan eliminated cost of living increases for non-union employees Reduced infrastructure maintenance, tree trimming, sidewalk replacement and general beautification Elimination of downtown sidewalk snow removal program Reduction of downtown planting program, replacement with sponsorship program Deferral of several capital purchases Increase in employee insurance copays

10. Personnel vs. Non-Personnel Costs

11. General FundBudgeted Revenues

12. History of General FundRevenues and Expenditures

13. Future Concerns • Reduction in revenue sharing from the State • Additional unfunded mandates • Aging infrastructure • Costs out of Village’s control • 21% of the General Fund’s expenditures go toward pension and healthcare premiums

14. Future Concerns Lack of sales tax base Slow down in real estate growth Dependence on property tax

15. General Fund Balance Projections No Additional Revenues *Assumes expenditures increase by 5 percent.

16. General Fund Projections Revenue Assumptions Taxes increase by 2.5%. Intergovernmental Revenues (Income Tax, Sales Tax, State Use Tax) increase by 1%. Also includes estimated revenues from Infiniti dealership. Licenses and Permits increase by 2%. Services Charges increase by 2%. Fines and Miscellaneous increase by 3%. Investment Income equals 2% of prior year fund balance.

17. General Fund ProjectionsExpenditure Assumption Expenditures increase by 5% annually. Average Increase over past 5 years

18. General Fund Balance Projections No Additional Revenues *Assumes expenditures increase by 4 percent.

19. Capital Fund Balance Projections No Additional Revenues If additional revenue sources are not obtained, the Village would need to choose between funding operations or capital improvements. Based on the Village’s current ten year capital plan, the Capital Fund balance would be depleted by FY2019.

20. Impact of continued cuts Slower administrative response times due to reduced hours Reduction in community event support Reduced CBD beautification/maintenance Slowing down of road/capital program implementation Scaling back or elimination of new rolled concrete curb installation’s throughout town Elimination/scaling back of non-core functions such as DARE Decreased ability to review operational efficiencies

21. “If you want things to stay the same, then things will have to change” -Giuseppe di Lampedusa

22. What is Home Rule?

23. What is Home Rule? Constitution of the State of Illinois: Adopted at special election on December 15, 1970 Article VII, Section 6: Powers of Home Rule Units A County which has a chief executive officer elected by the electors of the county and any municipality which has a population of more than 25,000 are home rule units. Other municipalities may elect by referendum to become home rule units. Except as limited by this Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt. Source: http://www.ilga.gov/commission/lrb/conmain.htm

24. Home Rule in Illinois

25. Home Rule in Illinois

26. Are Communities like Clarendon Hills becoming Home Rule?

27. Suburban Towns with Average Home Sales over $600,000

28. Suburban Towns with Average Home Sales over $600,000

29. Suburban Towns with Average Home Sales over $600,000

30. Uses of Home Rule Fee recovery Legal and local control Stronger Business licensure to prevent fraud and abuse Intergovernmental agreement flexibility, including additional opportunities for shared services limited for non-home rule communities Elimination of State “Tax Cap” Impact fees on construction and development Property acquisition and disposal Broader powers to promote and control economic development Ability to eliminate obsolete organizational arrangements

31. Limits on Home Rule • Article VII limits certain abilities of home rule municipalities: • Issued debt which is paid by ad valorem property tax receipts may not have a maturity period longer than 40 years • Home rule units have a constitutional debt limit • No home rule unit may define or provide for felonies, or for Class A misdemeanors without specific statutory authority • The General Assembly can also vote to impose additional limits on home rule units of government • Village Board still made up of representatives of the community; still subject to local election • 50% of Board up for re-election every other year • Example of Self imposed limits: • Local “Tax Cap” has been proposed and will be discussed at the February 21st Board Meeting

32. Home Rule in Practice • Research shows that home rule municipalities do not have a higher property tax rate on average than non-home rule municipalities. (Banovetz 2002; Banovetz and Kelty 2002; Dye and McGuire 1997; Wood 2011) • Historically, voters in home rule communities want to retain home rule. No community has rescinded home rule since 1983.

33. Home Rule Research Committee

34. Home Rule Committee Process • Committee was formed in May, all volunteers who stepped forward were put on the committee. • In June, a presentation by Village Staff on Home Rule, and the Village’s financial condition. Committee members identified information they felt they needed to make a decision on the issue. • In July, the information requested by the committee was presented to them. The Committee requested that guest speakers be invited to the next meeting that had experience with and knowledge of home rule. • In August, Mayor David Brummel of Warrenville, IL, and Patrick Lucansky of the law firm Klein, Thorpe, and Jenkins spoke. Village staff also presented additional financial analysis information requested by the Committee at the July 7th meeting. • In September, the committee discussed five motions prepared by Village staff relating to the appropriateness and potential use of Home Rule in Clarendon Hills. The Committee approved the final report document for submittal to the Village Board.

35. Home Rule Committee Findings • The attainment of Home Rule status is appropriate for the Village of Clarendon Hills at this time: 10 yes, 2 No • Home Rule status should be utilized to affect an increase in the Village’s property tax rate beyond the authority allowed Non-Home Rule municipalities: 9 Yes, 3 No • Home Rule status should be utilized to affect increases in other revenues, as determined by the current and future Village Board, to offset increases in property taxes: 11 yes, 1 no • The Village Board should utilize non-financial Home Rule powers as they deem appropriate and necessary: 9 yes, 2 no, 1 abstention • If a Home Rule referendum is attempted and fails, the Village should pursue an increase in property taxes by referendum: 11 yes, 1 abstention

36. Updated Plan including Home Rule • Maintain General Fund balance through Sales Tax, reassignment of existing revenues from Capital Fund to General Fund • Use of Home Rule for additional Cost Savings and efficiencies and expanded Economic Development • Slow down of capital expenditures, additional cost sharing with residents and borrowing for future large projects • Continued engagement with residents on budgetary priorities and revenue • Possible property tax referenda in future years

37. Home Rule Use Home Rule Sales Tax • Places for Eating Tax (PFE) could be repealed and an overall 1% sales tax could be put into place • This would generate $200,000 a year ($100,000 if PFE Tax were repealed) • Would eliminate local administration of the PFE Tax

38. General Fund Balance Projections No Additional Revenues *Assumes expenditures increase by 5 percent.

39. General Fund Balance Projections with Home Rule Sales Tax and Transfer of Existing Revenues Beginning in FY2013, Home Rule revenues include a 1% Sales Tax and repeal of the Places for Eating Tax. In addition, a Portion of Utility Taxes would be reassigned to the General Fund beginning in FY2016. 4.5% annual increase in ex.p. assumed

40. General Fund Balance Projections with Home Rule Sales Tax and Transfer of Existing Revenues Beginning in FY2013, Home Rule revenues include a 1% Sales Tax and repeal of the Places for Eating Tax. In addition, a Portion of Utility Taxes would be reassigned to the General Fund beginning in FY2016. 4% annual inc. in exp assumed

41. Capital Fund Balance Projections No Additional Revenues If additional revenue sources are not obtained, the Village would need to choose between funding operations or capital improvements. Based on the Village’s current ten year capital plan, the Capital Fund balance would be depleted by FY2019.

42. Capital Fund Balance Projections Partial Transfer of Rev/Exp Reduction Utility tax revenues are shared with the General Fund beginning in 2016, road program is significantly diminished with greater cost sharing with residents. Additional borrowing may have to be considered to maintain funding levels

43. Other Considerations • Economic Development Advantage • Very competitive environment as communities fight to expand their tax bases • Protection from Springfield • Supermajority needed to impose a mandate on a Home Rule Community • Operational Flexibility = additional savings • Only option that combines revenue and increased flexibility

44. Questions?