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Rockford’s spending gap didn’t happen overnight

ROCKFORD — Rockford’s budget deficit didn’t happen overnight, despite the clamor of the home rule debate and claim that the current administration is to blame.

According to the staffer who oversees the city’s finance department, things have been slowly piling up, bringing Rockford to what was until recently a more than $10 million hole.

“This historical use of one-time revenue and increased expenses and reductions with the expectation that recurring revenue would recover,” Finance Director Carrie Eklund said of the primary reason for a year-over-year shortfall that’s finally reached a breaking point. “Our sales tax revenue we’re budgeting for 2018 is less than we budgeted for in 2006. “It’s situations like that that continue to drive budget deficits.”

In the last 15 years, some operating expenses have remained the same while many have increased. But revenue hasn’t kept pace, Eklund added.

Of those expenses are crippling pension costs. In 2018, the city will pay more than$17 million into the police and firefighter pension funds as the amount owed to each continues to grow. As it stands, the two funds carry nearly $300 million in unfunded liability.

Rockford’s pension contributions have grown from $9.5 million in 2013 to $17.3 million in 2018.

“This is an obligation we have to pay,” Eklund said. “And it goes to show how personnel costs are consuming the available resources that we have.”

Illinois’ role in Rockford’s woes is also an elephant in the room. State lawmakers took two years to pass a balanced budget, and when it finally did, it came with income tax hikes. And they were not only at the expense of residents but municipalities across the state.

“They increased the income tax rate and are sharing less of it with local government, adding $2.4 million to (Rockford’s) budget deficit,” Eklund said.

On the plus side, Rockford’s $10.2 million spending hole is now $3.9 million thanks to the work of the citizen-led financial task force that reviewed expenses last year. The group sharpened their pencils wherever they could and recommended the reinstatement of home rule after 35 years.

Because the deficit has been projected to exceed $75 million over the next five years, leaders are looking for long-term solutions, not just to stop the bleeding in 2018. That’s where they say home rule would be beneficial.

Currently, the city cannot use revenues it collects from tourism to pay police and fire salaries and their associated legacy costs. Redevelopment funds must also be used only for that purpose only, according to state  law. If Rockford restores home rule, those income streams could help balance the general fund.

“This has been growing for the last 15 years,”Eklund said. “We never recovered from the 9-11 economic downturn and despite significant operational changes, outsourcing and studies, we are at a place where cuts mean service reductions. We need to align revenue with our citizens expectations for services or reduce those services.”

Reducing services is something leaders have vowed not to do, especially public safety. And with Rockford considered the most dangerous city in Illinois according to stats, it’s not being mulled. The city has hired more police and doing what it can to preserve and improve the current outlook in the fire department. R.

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