Revenues are down and expenses are up in the city of Peoria's proposed 2024-25 spending plan.
The city expects to bring in about $291.6 million in revenues. That's a 6.22% decrease largely driven by the drop off of federal COVID-19 relief funds. The city doesn't plan to issue any bonds in 2024.
Finance director Kyle Cratty said some type of economic pullback is factored into that revenue estimate, particularly when it comes to real estate and corporate personal property replacement taxes.
"It feels like a lot of the larger pressure towards a recession is abating, that we're looking more at maybe some small pullback, some soft landing, but not anything that's on the offing of like an '08, or those kind of levels of a recession," Cratty said.
Expenses are up 5.4%. The city will tap into $30.2 million of fund balances to bring expenses and revenues into line. Excess fund balances would be held for future pension payments.
The city's public safety pension obligations will balloon exponentially over the coming decades, eating up more and more of the city's general funds. Cratty said pension payments are increasing by around $2 million this year, but will grow to $8 million a year by 2040. The city has a net pension liability of $374.8 million.
The city also is on the hook for around $150 million in stormwater system overhauls to greatly reduce the city's combined sewer overflow events. Untreated sewage flows into the Illinois River after heavy rainfall or snow melt events. The city is under a consent decree with the U.S. EPA to fix the problem by 2040.
The $321.8 million budget is a substantial increase from last year's $262 million budget, and includes $101 million in capital project spending — a 35% increase over last year.
Fifth District councilman Denis Cyr said he's "very concerned" by how fast the city budget is growing.
"That's a lot of money. A $100 million increase (over two years), and we're ... $30 million over, really, the income this year, right? I mean, that's why we're more spending down our capital in the emergency fund. But I mean, those are just humongous numbers for me," he said at Tuesday's city council meeting.
Cratty said the big increase is driven by the capital budget.
"It's a lot of those one-time purchases, and a lot of it driven by state and federal grant dollars. So what will happen over time is we will start to get back to that normal level of around that $240-ish million, as some of these grant dollars come off the books as well as the ARPA dollars come off the books," he said.
The city has a long list of infrastructure projects on its to-do list, including an $8.6 million reconstruction of the University/Pioneer Parkway intersection, nearly $7 million for the third year of the city's combined sewer-overflow reduction overhaul, $5 million for a new fire station on Northmoor Road, and $1.59 million for the Adams/Jefferson two-way conversion downtown. Many of the capital projects are supported by state or federal grants.
City Manager Patrick Urich said about $500,000 is set aside for street lighting improvements in each council district. Major overhauls of the riverfront and Main Street were set aside from the capital improvements roster because they're contingent on state funds that haven't yet been released.
The city also plans to bring on an additional 12 new employees, including nine full-time stormwater maintenance positions, a grant writer for public works, a building inspector, and an IT lead for the public safety departments.
At-large councilman John Kelly said it's time for the city to start thinking outside the box when it comes to how it thinks about money.
"We're doing the same things that cities that are dying, especially older northern cities," he said. "We're doing the same things that they're doing with this temporary bump in our financial prospects. It seems to me that it's time to step away from invention and try to do some things that really, really can encourage growth in our city."
He cited removing building permit and rental registration fees as a couple small examples of his line of thinking.
The council will resume budget talks at its regular meeting next Tuesday. A final vote on the budget and 2022 tax levy is expected on Nov. 14.
