budget message

April 3, 2023

Honorable Mayor Pecak and Board of Trustees,

We are pleased to present the Village of Lisle’s Fiscal Year 2023-2024 Budget and Five-Year Capital Improvement Plan (CIP). Together these policy documents represent a financial roadmap for the Village of Lisle; a map that guides operational decision‐making, helps to support the Village’s organizational values, advances the Village Board’s vision and strategic performance areas, and reinvests in vital community initiatives. The Village is committed to providing services in a more efficient and effective manner than ever before, and continues to pursue innovative and sustainable measures for improvement by being flexible and transforming patterns in its service delivery models.

Village staff has developed the budget around the strategic vision, mission, values and performance areas set forth in the adopted 2022-2025 Strategic Plan. Approved at the beginning of January 2022, the Village’s Strategic Plan for 2022-2025 includes four strategic performance areas: Foster Economic Investment, Fiscal Sustainability, Safe and Welcoming Community, and Innovative Service Delivery. Expenditure recommendations are intended to foster progress and achieve positive outcomes as measured by the metrics included in the Strategic Plan.

The FY2023/24 Budget allocates resources towards achieving the vision outlined in the adopted 2022-2025 Strategic Plan. The budget reinforces the Village’s commitment to long-term fiscal stewardship, operational efficiency, strategic investments, and the continued delivery of high-quality municipal services.

• Total budget expenditures for all Village funds are $48,908,036. Total budgeted revenues are $42,112,085, for a planned reserve spend down of $6,795,951.
• The budget is balanced as the sum of estimated revenues and fund balances are equal to or greater than expenditures. The budget was developed without the addition of new revenue sources.
• The Village’s overall fund balances exceed the minimum reserve policies established by the Village Board. Conservative financial management and related policies have allowed for the prudent maintenance of reserves.
• The Village Board approved a flat property tax levy that includes an abatement of the corporate portion of the levy in the amount of $250,000. The levy has remained flat since 2017. The abatement was possible due to the General Fund reserve balance exceeding projections during the last two fiscal years.
• The budget calls for investing in staff and includes provisions of the Compensation Plan adopted in FY2022-23. The plan was developed with a consultant to assist in the recruitment of the best employees and to retain them in a competitive marketplace. It continues the Village’s pay‐for‐performance philosophy and includes a salary grade market adjustment of 2.5% and a variable merit program with the maximum potential of a 4% salary increase for high performance. To address department pay compression, the Police Sergeant salary grade has been adjusted from a grade 9 to a grade 10 for FY2023/24.
• The expenditure budget includes funding for capital projects in the amount of $11,587,746, which includes funding $6,166,976 in stormwater projects.
• The building hours at the Village Hall and Police Department will be adjusted due to operational efficiencies gained through the implementation of OpenGov and the daily commuter parking application. Operational efficiencies include expanding online application and payment options for Village customers. The updated hours at the Village Hall will be 8:00 a.m. to 4:30 p.m. and the Police Department hours will be 7:00 a.m. to 5:30 p.m.
• The Village received the first disbursement of funds from the American Rescue Plan Act (ARPA) in FY2021/22 and the second disbursement in FY2022/23 for a total of $3,166,690. These funds will be utilized for stormwater improvement projects.

Determinations and final recommendations contained within the FY2023/24 Budget factor in the Village electing to keep the property tax levy flat for an additional year and include the following:

• Conservative revenue projections that account for continued economic volatility.
• Capital project investments based upon approved long-term plans.
• Building and maintaining an exceptional workforce, dedicated to innovation and continually identifying ways to be more efficient and make the most of taxpayer resources.
• Continued implementation of new ERP technology and software which will further organizational effectiveness and transparency.

Total FY2023/24 budgeted revenues for all funds amount to $42,112,085 and total FY2023/24 budgeted expenditures for all funds amount to $48,908,036. The following graph presents total revenues and expenditures by fund type.

As noted above, the FY2023/24 total budgeted revenues for all funds, including interfund transfers, are estimated to be $42,112,085. This is an increase in revenues of $2,031,541 or approximately 5.07%, as compared to the FY2022/23 budgeted revenues. Major factors influencing revenues include the following:

• Sales Tax has experienced significant growth during the last three years due to the recovery from the global pandemic, the addition of new retailers within the Village of Lisle, and the new legislation that requires sales tax be collected on online sales. It is projected that sales tax will increase by 33.27% or approximately $1,400,000 from FY2020/21 to FY2023/24.
• The Village Board approved a flat property tax levy at $4,924,129 that includes an abatement of the corporate portion of the levy in the amount of $250,000. The decision was based on the Village's current financial position and in recognition of current economic pressures faced by Lisle property owners.
• Income Tax is estimated to have increased by 9.78% or approximately $337,000 from FY2021/22 to FY2022/23 due to the Illinois labor market rebounding significantly and corporate income tax receipts exceeding expectations. Income tax is projected to decrease in FY2023/24 compared to FY2022/23 in the amount of $327,816 due to the possibility of a recession.
• Hotel/Motel tax suffered a significant decline in 2020 due to the change in travel during the global pandemic. While the revenues are still below pre-pandemic levels, there is a clear upward trend as hotel/motel occupancies continue to recover. The budget for FY2023/24 forecasts an increase of 28.15% or approximately $65,000 compared to the FY2022/23 amended budget.
• A transfer from the General Fund in the amount of $2,250,000 to the Stormwater Fund is included in the FY2023/24 budget to fund a portion of stormwater improvement projects.
• Investment Income continues to increase as the Federal Reserve Board has increased rates by 4.5 percentage points since March 2022.
• In March of 2021, the federal government enacted the American Rescue Plan Act (ARPA). Included in the ARPA program was $65.1 billion in COVID-19 relief to provide financial assistance for municipalities nationwide. The Village received approximately $3.1 million in funding, with the first half of the disbursement received in FY2021/22 and the remainder in FY2022/23. These funds are allocated to stormwater improvements.

The below table illustrates the changes in the revenue classification types compared to the prior fiscal year.

The FY2023/24 total expenditure budget for all funds is $48,908,036. This amount represents an increase of $959,514, or approximately 2.00%, compared to the FY2022/23 total amended expenditure budget. The change in expenditures is due to the following:

• Salary and benefits increased by 1.34% due to increases according to the FY2023/24 compensation plan and projected health insurance increases. The FY2022/23 amended budget included significant buyout costs associated with reducing the long term vacation accrual financial liability. The amount budgeted for payouts in FY2022/23 was $492,231 compared to $87,774 in FY2023/24 for the second year of the program. The Village's IMRF rate continues to decline from 10.81% in FY2022/23 to 8.23% in FY2023/24 which equates to an approximate decrease of $90,000 in pension costs.
• Contractual Services increases in FY2023/24 are partially due to engineering services for the roadway reconstruction on Burlington Avenue in the amount of $620,000. Additional increases are related to incorporating inflationary increases offset by funds included in the FY2022/23 budget for a comprehensive land use plan update and engineering assistance in rewriting a section of the Village Code.
• Budget carryovers from FY2021/22 for projects not yet completed added approximately $2,936,000 to the FY2022/23 Amended Budget.
• As noted in the revenue section, a transfer from the General Fund in the amount of $2,250,000 to the Stormwater Fund is included in the FY2023/24 budget to fund a portion of stormwater improvement projects.

The below table illustrates the changes in the expenditure classification types compared to the prior fiscal year.

The General Fund expenditure budget is $21,421,085, while General Fund budgeted revenues total $20,131,198, resulting in a fund balance reduction of $1,289,887. The reduction is partially due to the transfer of $2,250,000 to the Stormwater Fund for improvement projects offset by increases in sales and income tax. The FY2023/24 ending unassigned fund balance is projected to be $18,556,010, or 109% of next year’s operating expenses which is well above the required 50% balance.

Revenues budgeted for the FY2023/24 General Fund total $20,131,198, $1,298,952 more than the FY2022/23 amended budget. The increase is due to projected growth in sales and income tax collections and investment income increases as discussed in detail in the revenue section above.

The largest General Fund funding source is tax revenue, accounting for 78.75% of total revenues. The below chart details the allocation of the different tax categories included in the FY2023/24 budget.

The General Fund accounts for the general operating costs of the Village. The Village’s General Fund expenditure budget for FY2023/24 is $21,421,085, which is $741,181, or 3.58% greater than the FY2022/23 Budget.

Salaries and benefits represent the largest budgeted expenditure for the General Fund at 63%, or $13,447,575 of total expenditures. Beginning in FY2020/21, all salaries and benefits are charged to the General Fund with an Administrative Fee charged to Enterprise Funds for any related personnel costs. Personnel cost increases are due to non-represented employee market and performance-based increases based on the compensation plan, collective bargaining wage adjustments, and projected health insurance increases. As mentioned previously, the FY2023/24 budget also includes costs related to the second year of the program for reducing the vacation time accrual financial liability.

Comparative personnel tables are included within each department budget.

Village functional areas have been categorized as Elected Officials, Village Manager, Financial Services, Development Services, Public Works, Police, and Administrative Services. This budget is organized by these categories and each functional area includes a description, list of significant accomplishments and objectives, budget highlights, personnel and expenditure summaries, and expenditure line item detail.

The Capital Improvement Plan (CIP) is a five-year plan for investments in facilities, transportation, equipment, water, sewer, and stormwater infrastructure. The Village has completed a comprehensive CIP for the five-year period beginning with FY2023/24. Included are capital expenditures projected to cost in excess of $20,000 and that have an estimated useful life of one or more years. The projects scheduled for the first year of the plan are subject to further review and approval by the Village Board at the same time as the operating budget.

The Village's FY2023/24 through FY2027/28 Capital Improvement Plan contains capital improvement projects totaling $36.5 million, with $11.6 million budgeted in FY2023/24. The majority of the capital projects focus on capital investments based upon approved long-term plans. The Village uses a pay-as-you-go approach to fund capital projects and actively pursues grant funding. The following is a description of major capital projects included in the FY2023/24 Budget:

Capital Improvement Fund

• Annual Road Rehabilitation Program - $1,380,000
• Burlington Avenue Reconstruction - $620,000
• Community Park Pedestrian Safety Canopy Improvement - $340,000

Water & Sewer Fund

• Sanitary Sewer Lining Rehabilitation Program - $175,000
• Sanitary Sewer Rehabilitation Project - Main Street - $780,000
• Well No. 3 Rehabilitation - $550,000

Stormwater Fund

• Stormwater Improvements - Village Center South - $3,360,000
• Lisle Levee Elevation Project - Easement Acquisition - $2,311,000
• Stormwater Improvements - Scarlet Oak Lane - $365,976

Additional information regarding capital projects planned for FY2023/24 can be found in the Capital Improvement Plan section of this document.

In a significant step toward greater efficiency and increased community engagement, both the Fiscal Year 2023-2024 Budget and Five-Year Capital Improvement Plan (CIP) were developed within the Village’s new OpenGov cloud software. OpenGov Budgeting and Planning has provided the Village with a collaborative, automated and transparent budgeting tool. Staff anticipates further refinements and enhancements over the next few budgeting cycles.

Through priorities established by the Village Board, Village staff have taken a steady, measured approach in preparing this budget. Despite various challenges, this budget and Capital Improvement Plan reflects the continuation of the Village management to collaborate and work towards the ongoing success of the Village’s strategic plan. The budget specifically provides for the following:

• Strong fund balance reserves above policy level of 50% throughout the current five-year forecast.
• Another flat property tax levy resulting in a rate reduction, and a one-time abatement of $250,000.
• Market and performance-based increases for the Village’s dedicated staff team.
• Continued investments in CIP projects and capital asset maintenance and replacement.

Going forward, it will be important to monitor the changing economic landscape and make corrections when necessary to the Village’s strategy. Conservative budgeting will sustain the Village’s financial reserves and mitigate the effects of economic uncertainty.

We would like to thank Mayor Pecak and Village Trustees for providing positive support and vision related to the preparation of the budget; and acknowledge the Village’s staff team for their contributions and commitment to the budget process.

Respectfully Submitted,