Long term financial forecast
Village of Lisle | Fiscal Year 2023/2024 Budget
Five-Year Financial Forecast
The Village of Lisle's adopted 2022-2025 Strategic Plan includes Fiscal Sustainability as one of the four strategic performance areas. To address this performance area, a Five-Year Financial Forecast was developed to provide a projection of the General Fund, which is the main operating fund of the Village. The goal of this forecast is to provide an understanding of the impact of various economic scenarios on General Fund reserves. Village policy requires a reserve balance in the General Fund to fund operations for a period of six months.
The general assumptions for the Five-Year Financial Forecast include the following:
- Revenue projections developed without the addition of any new revenue sources and the continuation of a flat property tax levy.
- Staffing levels maintained at the current levels included in the FY2023/24 budget.
- Personnel cost increases based on market and performance-based adjustments established in the compensation plan for non-represented employees, and collective bargaining wage adjustments for represented employees.
- Current service levels continuing and maintained in future years.
- Inflationary increases of 2% for the purchase of goods and services.
- Planned transfers to capital funds based on funding sources identified in the Five-Year Capital Improvement Plan.
The following table and chart summarizes the revenue assumptions for the various scenarios:
For each scenario, expenditure assumptions were unchanged and applied to the following revenue scenarios:
- Baseline – assumes average conditions continue
- Growth – applies a growth factor to revenues that would be affected in a growing economy
- Adverse – applies negative factors to revenues that would be affected in a shrinking economy
- Critical – applies specific loss of sales tax revenue related to local economy conditions and assumes other average conditions continue
The results of the four different scenarios are detailed below. This forecast demonstrates that the Village has the resources needed to weather economic uncertainty under all but the most critical circumstances.
The Government Finance Officers Association (GFOA) recommends that all governments prepare and maintain a long-term financial plan that projects revenues, expenses, financial position, and external factors for key funds and government operations at least five years into the future. The plan should be reviewed on an annual basis and updated as needed or as major assumptions change. Long-term financial planning should be the starting point for capital planning, developing of operating budgets, and other planning processes.